James H. Im of New York New York a stockbroker formerly registered with Nomura Securities International Inc. has been charged by Securities and Exchange Commission (SEC) in a Complaint alleging that Im engaged in securities fraud in regard to the purchases and sales of mortgage backed securities. Securities and Exchange Commission v. James H. Im Case 1:17-cv-03613 (May 15, 2017).
According to the Complaint, during the time that Im was the co-head of Nomura Securities International’s commercial mortgage backed securities trading desk, he was an intermediary on trades involving the firms customers who requested to purchase and sell commercial mortgage backed securities on the secondary market. In that capacity, he represented Nomura as the buyer of the commercial mortgage backed securities from willing sellers. The commercial mortgage backed securities were then sold by Im to other customers at a higher price point.
The Complaint alleged that between 2010 and 2014, in multiple circumstances, Im willfully lied and misled customers when trading on Nomura’s behalf. Particularly, Im reportedly failed to be forthcoming with customers in regards to the price that the securities had been purchased or sold for by the firm; the offers and bids which the firm received or made; the owner of the securities; and the compensation which the firm stood to receive as the intermediary.
The Complaint alleged that Im did more than just misrepresent the prices when dealing with investors – he faked having conversations and negotiations with third parties. Particularly, he reportedly told customers in the market to purchase the commercial mortgage backed securities that he engaged in conversations with prospective sellers of the securities. The Complaint stated that in one of Im’s exchanges with a commercial mortgage backed securities seller, he boasted about deceiving one of the buyers, requesting that the seller of the securities keep quiet about the lies.
The Complaint stated that investors had been defrauded by Im in addition to other managers of funds who had effected trades on the firm’s behalf. SEC alleged that there were fiduciary obligations owed to the customers by the managers and advisors – they were supposed to generate the best price possible for their customers. SEC stated that the overall price and the compensation paid to Nomura for the commercial mortgage backed securities were major components weighing on customers’ decisions to transact. The Complaint alleged that Im inflated Nomura’s commercial mortgage backed securities desk profits because of the fraud committed by Im.
The Complaint alleged that Im accumulated illicit gains for Nomura, which contributed to Im being paid a bonus of $3,790,000.00. Consequently, SEC alleged that Im’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17(a).
Im’s registration with Nomura has been terminated as of January 8, 2015. Im later worked for Stifel Nicolaus Company Inc. from December 18, 2014 to May 16, 2017, at which point the firm terminated him after learning of the SEC’s Complaint alleging Im to have engaged in fraudulent conduct.
