Riverside Man Pleads Guilty to Multi-Million Dollar Securities Fraud Scheme

A Riverside man pleaded guilty in federal court in Hartford Monday to participating in a multi-million dollar securities fraud scheme while he worked as a supervisor at the Stamford-based global securities firm RBS.

In an announcement, Connecticut’s U.S. Attorney Deirdre M. Daly, Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Romero, and Special Agent in Charge of the FBI’s New Haven Division Patricia M. Ferrick, said that the former supervisor waived his right to indictment and pleaded guilty to participating in the securities fraud scheme from 2008 until 2014.

Adam Siegel, 37, also entered into an agreement to cooperate in the government’s ongoing investigation, according to the U.S. Attorney. Siegel is the second man to plead guilty in the case and to agree to cooperate with the investigation.

According to court documents and statements made in court, between July 2008 and approximately 2014, Siegel was the co-head of U.S. Asset-Backed Securities, Mortgage-Backed Securities and Commercial Mortgage-Backed Securities Trading at RBS Securities Inc. RBS has a trading floor in Stamford where Siegel and some of the RBS employees that he supervised traded fixed income investment securities such as residential mortgage-backed securities (RMBS) and collateralized loan obligations (CLOs). In pleading guilty, Siegel admitted that he and others conspired to increase RBS’s profits on CLO and RMBS bond trades at the expense of customers. As part of the scheme, Siegel and his co-conspirators made misrepresentations to induce buying customers to pay inflated prices and selling customers to accept deflated prices for bonds, all to benefit RBS.

• To sign up for breaking Greenwich news alerts and more, click here.
  

The conspiracy was perpetrated in two ways. In certain transactions, Siegel and his co-conspirators misrepresented the seller’s asking price to the buyer (or vice versa), keeping the difference between the price paid by the buyer and the price paid to the seller for RBS. In other transactions, Siegel and his co-conspirators misrepresented to the buyer that bonds held in RBS’s inventory were being offered for sale by a fictitious third-party seller, which allowed RBS to charge the buyer an extra, unearned commission.

The investigation revealed numerous fraudulent transactions by SIEGEL and other members of the conspiracy that cost at least 35 victim customers, including firms affiliated with recipients of federal bailout funds through the Troubled Asset Relief Program, millions of dollars.

SIGTARP Inspector General Romero said in a statement, “During the financial crisis, Adam Siegel exploited the lack of transparency in those markets by victimizing the firm’s customers, including TARP banks. His crime included defrauding buying customers about the price his firm paid so that he could charge more, defrauding selling customers about the price a buyer was willing to pay, and lying that a bond his firm already held in inventory was actually being sold by a seller at an artificially inflated price.”

Siegel pleaded guilty to one count of conspiracy to commit securities fraud, which carries a maximum term of imprisonment of five years. He was released on a $250,000 bond and is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny on March 11.

On March 11, 2015, New York City resident Matthew Katke, a registered broker-dealer and managing director at RBS Securities Inc., pleaded guilty to the same charge and also is cooperating with the government.