Used-Car Salesmen Are Just Like Bond Traders

This post originally appeared in Money Stuff.

We have talked any number of times here about Jesse Litvak, the former Jefferies LLC bond trader who lied to his customers about how much he had paid for bonds. He would buy bonds for, say, 60, and tell the customer he'd paid 65, and sell them to the customer for 65.25, or whatever. Eventually he was charged with a crime for this, and convicted, and appealed, and won on appeal, but then was convicted all over again and sentenced to two years in prison. But in his appeal he argued that lying to customers about the price he paid for bonds was not a crime, because his lies were not material. For one thing, he argued, what mattered to the transaction was not the price that Litvak had paid but the price that the customer was willing to pay.