Feds flip ex-RBS trader: sources
Federal prosecutors have flipped a top former bond trader and are using him to build a broader fraud case against the Royal Bank of Scotland, The Post has learned. Adam Siegel, a former top bond trader at RBS in Stamford, Conn., has been cooperating with prosecutors working for US Attorney Deirdre M. Daly (left) who are looking into allegations that the bank lied to clients about the value of certain bonds.
The clients, including hedge funds and other institutional buyers, were told the bundles of bonds were worth more than they actually were, sources familiar with the investigation told The Post.
Siegel, who headed the securitized debt trading desk at RBS, which handled the pricing and sale of residential mortgages, is at least the second banker squeezed by prosecutors.
Ex-banker Matthew Katke who, like Siegel, pleaded guilty to securities fraud earlier this year, is also helping the government build its case against the bank, The Post first reported last year.
Jonathan Polkes, a lawyer for Siegel, reached at his office on Wednesday, declined to comment.
Thomas Carson, a spokesman for Daly’s office, confirmed that Siegel had signed a cooperation agreement with the government, but declined to comment further on any other aspect of the probe.
Siegel is expected to be sentenced before Dec. 31, sources said. Daly has not accused the bank of any wrongdoing. RBS declined to comment. Since 2014, the government has been aggressively going after bond traders for puffing up the price of hard-to-value bonds, which aren’t traded on public exchanges.
In the first such major case, former Jefferies bond trader Jesse Litvak was found guilty by a federal jury of securities fraud. He was sentenced to two years in prison.
An appeals court tossed the ruling after finding that evidence was wrongly excluded from trial. Litvak is expected to be retried.
Earlier this week, the Securities and Exchange Commission banned ex-Goldman Sachs trader Edwin Chin from the securities industry and fined him $400,000 for ripping off clients and reaping an extra $1.5 million in profit for the bank.