Jefferies Trader Charged in Hoodwinking Taxpayers
The SEC notes in its charge that during the years of Litvak's alleged fraud, the trader's discretionary bonus totaled $11,783,296.
In its complaint, the SEC is charging Litvak with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The SEC will seek a disgorgement of Litvak's ill-gotten gains with interest, in addition to civil monetary penalties "due to the egregious nature of Litvak's violations," the agency states in its complaint.
Separately, the U.S. attorney's Connecticut office announced criminal charges against Litvak. In total, Litvak was charged with 16 criminal counts, which include one TARP fraud charge, four counts of making false statements and 11 counts of securities fraud.
"Jesse Litvak did not cheat anyone out of a dime. In fact, most of these trades turned out to be hugely profitable," Patrick J. Smith, an attorney at DLA Piper said in a statement on Litvak's behalf. "The allegation that Jesse defrauded any counter-party -- PPIP or private -- is simply untrue," Smith added.
Litvak pleaded not guilty on Monday and was released on a $1 million bond.
In total, the government invested roughly $22.1 billion in public-private investment funds. Recently, asset managers BlackRock and AllianceBernstein liquidated their PPIP funds, netting the Treasury annualized gains of between 18% and 24% and a profit of roughly $900 million.
-- Written by Antoine Gara in New York