Ex-Barclays Traders Settle With SEC Over Excessive Markupsby
Yoon Seok Lee and David Wong agree to penalty, one-year bans
Bank to pay $1 million fine for failing to oversee the traders
Two former Barclays Plc traders agreed to settle U.S. Securities and Exchange Commission claims that they misrepresented prices of bonds they sold to customers, earning excessive mark-ups in the process.
Yoon Seok Lee, 33, and David Wong, 35, earned about $15.5 million in illegal profits for the bank by trading residential mortgage-backed securities, according to an SEC administrative release this week. Each agreed to one-year suspensions without admitting or denying the regulator’s findings. Lee will pay a $200,000 penalty, while Wong will pay a $100,000 fine.
Barclays agreed to pay a $1 million penalty for failing to supervise the traders -- less than what other banks have paid for similar conduct -- and to return the profits. The lender benefited because of its “significant cooperation” providing “detailed trade communication information essential to understanding the transactions and identifying false or misleading statements,” the SEC said.
The two traders, who have left the company, in some cases offered prices that had no “reasonable relationship to the prevailing market prices.” The misrepresentations led customers to accept less, or pay more than what they might otherwise have accepted or paid, the SEC said. Customers were unaware of the markups.
“Mr. Lee is pleased that this is resolved as he moves forward with his future endeavors, and is grateful to those who supported him throughout this process,” his attorney, David Zinn, said in a statement. An attorney for Wong didn’t return an email request for comment. A Barclays spokeswoman declined to comment.
The SEC has gone after at least a dozen traders over misconduct in the opaque market for securitized debt. Additionally, the U.S. Justice Department has criminally charged eight traders over similar violations in a sweep that began after the 2008 financial crisis. The first person charged, former Jefferies LLC managing director Jesse Litvak, was sentenced to two years in prison last month. The criminal trial against three former Nomura Holdings Inc. starts Monday.
Jefferies LLC paid a $25 million fine in 2014 for failing to supervise Litvak.