A former ConvergEx Group LLC trader was charged by U.S. authorities with defrauding customers of millions of dollars by hiding markups on stock trades and falsifying records.
Craig Marshall, who was based in Bermuda, was charged in a sealed indictment May 27 with sending transaction reports to clients containing fabricated details about their trades, U.S. Justice Department officials said in an e-mailed statement. Marshall made his first appearance before a federal judge in New Jersey today.
ConvergEx, which executes trades for hedge funds and endowments, agreed last year to pay more than $150 million to settle U.S. Securities and Exchange Commission claims over the concealed markups.
Traders Jonathan Daspin and Thomas Lekargeren pleaded guilty in December to conspiracy to commit securities and wire fraud, Justice Department officials said. ConvergEx last year also entered into a deferred-prosecution agreement with the Justice Department, and its Bermuda unit pleaded guilty to wire fraud and conspiracy charges.
The company, whose biggest investors include Chicago-based private-equity firm GTCR Golder Rauner LLC and Bank of New York Mellon Corp., acknowledged in the SEC case that it cheated institutional clients from 2006 to 2011. It would unnecessarily route trade orders to its Bermuda unit, which used another company to execute them at additional cost, the SEC had said.
Marshall, 47, is accused of sending two false reports to clients with fabricated details about stock trades, “including the number of shares involved in a trade, the time at which a trade was executed and the price at which shares were either purchased or sold,” Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division said in the statement.
Caldwell said Marshall’s actions allegedly caused the ConvergEx clients to lose more than $5.1 million on their trades.
U.S. probes into ConvergEx’s trading practices scuttled a takeover bid by London-based buyout firm CVC Capital Partners Ltd. in December 2011. The purchase may have been valued at $1.9 billion, people with knowledge of the talks said at the time. ConvergEx also withdrew plans for an initial public offering last year.
Bloomberg LP, the parent of Bloomberg News, competes with ConvergEx in providing trading services and technology.
The criminal case against the company is U.S. v. ConvergEX Group LLC, 13-cr-00811, U.S. District Court, District of New Jersey (Newark).
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