Nomura Said to Suspend Ex-RBS Debt Trader Amid Market ScrutinyJody Shenn and Lisa Abramowicz
Nomura Holdings Inc., the Japanese brokerage that expanded into U.S. credit after the financial crisis, put securitized-debt trader Matt Katke on leave, according to a person with knowledge of the move.
Katke traded securities known as collateralized loan obligations that are backed by high-yield corporate debt, said the person, who asked not to be named because the suspension wasn’t public.
The action is the latest in a string of suspensions across Wall Street as regulators scrutinize transactions in debt backed by everything from mortgages to corporate loans. Katke had also traded CLOs at Royal Bank of Scotland Group Plc, and the suspension is at least in part tied to his activities there, the person said.
Katke didn’t respond to voice messages and texts sent to his mobile phone. Jonathan Hodgkinson, a Nomura spokesman, and Sarah Lukashok, a RBS spokeswoman, declined to comment.
Trading in mortgage bonds and other securitized debt has come under scrutiny of regulators after former Jefferies Group LLC trader Jesse Litvak was accused and later convicted of securities fraud for lying to clients about what he charged them. Nomura placed at least two other traders on leave, while RBS and JPMorgan also suspended traders, people with knowledge of those moves said at the time. It’s unclear why the decisions were made or whether any of the actions have been related.
Investigators have been finding signs that dealers are lying to clients and striking improper deals such as parking debt, Michael Osnato, head of the complex financial instruments group in the Securities and Exchange Commission’s enforcement division, said in an interview earlier this year. He called bad behavior in the market “more pervasive than we would like.”
Litvak is appealing his March conviction for misrepresenting facts such as how much sellers were asking for mortgage securities or what customers would pay. His lawyer said in a November hearing that the conviction could be used to turn “garden-variety statements” made in all kinds of negotiations into the basis for charges.
Katke joined Nomura in August 2013 after leaving RBS three months earlier, according to Financial Industry Regulatory Authority records. He was among 15 former Bear Stearns Cos. employees to leave for RBS in 2008 after JPMorgan Chase & Co. agreed to buy the investment bank as it neared collapse.