US fines Nomura $35 million over traders’ lies about bond prices

By Jonathan Stempel

(Reuters) -Nomura Holdings agreed to pay a $35 million fine and enter a non-prosecution agreement to resolve a decade-long U.S. Department of Justice criminal fraud probe into traders accused of lying to customers about bond prices in order to boost profit.

Traders at Nomura Securities International, mainly in New York City, were accused of having from 2009 to 2013 overstated the prices that sellers were demanding for residential mortgage-backed securities, and pocketing the difference.

The traders were also accused of charging customers with extra, unearned commissions by pretending to negotiate prices on bonds that Nomura had already bought.

Nomura will also pay about $808,000 in restitution to victims under Tuesday’s settlement, which was announced by U.S. Attorney Vanessa Roberts Avery in Connecticut.

It previously paid about $20.1 million in restitution, plus a $1.5 million fine, under a related civil settlement in 2019 with the U.S. Securities and Exchange Commission.

Avery’s office said the latest settlement took into account Nomura’s acceptance of responsibility, compliance upgrades and “extensive” cooperation.

“Nomura is pleased to have resolved the matter and grateful that the DOJ recognized the firm’s remediation and cooperation,” Nomura said in a statement.

Federal authorities announced their crackdown on improper bond sales tactics in January 2013.

Their probe in part concerned transactions linked to the federal bailout known as the Troubled Asset Relief Program during the 2008 global financial crisis.

Prosecutors had mixed success, being unable to win convictions and prison terms that survived the appeals process against the eight traders who they charged criminally.

Three Nomura traders were criminally charged, and the only one who was convicted was sentenced to probation. Two other Nomura traders faced SEC civil charges.