- Kevin Blaney barred from industry for 3 months, fined $30,000
- Blaney, then a managing director, resigned from firm in 2014
A former Jefferies Group mortgage-bond salesman was barred from the securities industry for three months after a regulator alleged he misled customers.
Kevin Blaney, a managing director whose tenure on the investment bank’s mortgage-backed securities desk overlapped with trader Jesse Litvak’s, agreed to a suspension that prevents him from having contact with any Financial Industry Regulatory Authority member through Dec. 5, according to a Finra disciplinary action dated Sept. 1. Blaney, who didn’t admit or deny the allegations, was fined $30,000.
Blaney “made a false statement to a customer, or failed to correct a statement made to a customer” on six occasions between January 2009 and December 2011, the industry-funded regulator said. Blaney was allowed to resign from Jefferies in August 2014 following an investigation into communications he made to buy and sell residential mortgage bonds, according to Finra records.
Blaney left the New York-based investment bank weeks after RMBS trader Litvak was sentenced to two years in prison for lying to customers about the securities between 2009 and 2011. Litvak’s conviction was overturned in December in an appeals court ruling that promises to recast how the government pursues cases against individuals for alleged wrongdoing on Wall Street. Litvak’s new trial is set for January.
Blaney’s and Litvak’s supervisor at Jefferies, former co-head of fixed income William H. Jennings, was suspended by Finra for three months starting May 2 and fined $30,000 for failing to properly oversee employees, according to the regulator. Jennings, who didn’t admit or deny the allegations, also left Jefferies in 2014.
Blaney, Jefferies spokesman Richard Khaleel, Finra’s Michelle Ong and Jeff Kern, an attorney for Blaney at Sheppard Mullin Richter & Hampton LLP, declined to comment.
David Zornow, Jennings’s lawyer at Skadden Arps Slate Meagher & Flom LLP, said his client “is rightfully proud of the global mortgage business that he built” and “looks forward to the future, having put this matter behind him.”
Finra investigators found that Blaney misrepresented the prices of bonds Jefferies bought or could have bought, and also inaccurately claimed the investment bank was trying to buy bonds it already owned, the regulator said. He also didn’t correct a Jefferies trader who misled a customer about a bond price, Finra said, without identifying that person.
Blaney and Litvak worked at Jefferies for four years starting in May 2008, according to Finra records. The two men earlier worked for five years at RBS Greenwich Capital, a unit of Royal Bank of Scotland Group Plc.