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Bond Traders From JPMorgan to RBS Placed on Leave

April 11, 2014

Mortgage-Bond Traders From JPMorgan to RBS Said Placed on Leave

An eviction team member removes a mattress from a house during a home foreclosure on in Miliken, Colorado. Photographer: John Moore/Getty Images

Mortgage-bond traders at JPMorgan Chase & Co. (JPM:US), Morgan Stanley and Royal Bank of Scotland Group Plc (RBS) were placed on leave in recent weeks or months, according to people familiar with the matter.

JPMorgan’s Ben Morganstein and Inga Norton, Morgan Stanley’s Nicholas Bonacci, and Adam Siegel of RBS were told not to come to work, the people said, asking for anonymity because the matter is private. It’s unclear why or if the actions are connected, the people said.

Former Jefferies Group LLC bond trader Jesse Litvak, 39, was convicted last month of securities fraud for lying to clients about what he charged them to trade mortgage bonds. Other banks including New York-based JPMorgan received requests for information from U.S. officials about mortgage-bond trading after Litvak’s arrest, people briefed on the matter said in January.

Asset-Backed Alert, an industry newsletter, reported earlier today that Morganstein and Siegel had been placed on leave.

Norton, Morganstein and Siegel declined to comment when reached by phone. Bonacci didn’t respond to calls and messages. Mark Lake, a spokesman for New York-based Morgan Stanley (MS:US), RBS’s Sarah Lukashok and JPMorgan’s Justin Perras declined to comment.

Siegel heads securitized-debt trading at Edinburgh-based RBS’s securities unit, which he joined in 2008 from Bear Stearns Cos., according to Financial Industry Regulatory Authority records.

Lacrosse Player

Bonacci, who trades subprime mortgage bonds and collateralized debt obligations, joined Morgan Stanley in 2007 after attending Dartmouth College, Finra records show. That same year, he was selected in the fourth-round of the Major League Lacrosse draft, and played in four games for the Long Island Lizards, according to the league’s website.

Morganstein joined JPMorgan in 2006 after graduating from Cornell University in Ithaca, New York, Finra records show. Norton, a saleswoman, came to the bank in 2009 from UBS AG.

Investors and banks lost billions of dollars on mortgage-backed debt during the financial crisis as U.S. home prices plunged and the market for such assets dried up. While the securities rebounded in the years that followed, markets remained illiquid with wide spreads between bids from buyers and offers from sellers.

Prosecutors accused Litvak of defrauding investors of $2 million by misrepresenting how much sellers were asking for the securities, or what customers would pay, and keeping the difference for Jefferies, which is part of New York-based Leucadia National Corp. Litvak, who’s scheduled to be sentenced May 30, asked a judge this week to throw out his conviction.

JPMorgan slid 3.2 percent to $55.57 at 3:01 p.m. in New York, while Morgan Stanley fell 2.7 percent. RBS closed down 0.9 percent today in London.

To contact the reporters on this story: Jody Shenn in New York at jshenn@bloomberg.net; Zeke Faux in New York at zfaux@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Shannon D. Harrington at sharrington6@bloomberg.net Christine Harper, Steven Crabill


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Companies Mentioned

  • JPM
    (JPMorgan Chase & Co)
    • $62.48 USD
    • 0.00
    • 0.0%
  • MS
    (Morgan Stanley)
    • $38.81 USD
    • -0.14
    • -0.36%
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