TRADER LIED, INVESTORS CRIED! RMBS FRAUD EXPOSED!

SEC v. Michael A. Gramins, Ross B. Shapiro, Tyler G. Peters — U.S. Securities and Exchange Commission Litigation Release No. 26246, dated February 13, 2025.

The SEC charged Michael A. Gramins, a former RMBS trader at Nomura, with defrauding investors. Gramins allegedly misrepresented bid and offer prices, Nomura's purchase and sale prices, and the firm's spreads to generate extra revenue. A final judgment was entered against him, permanently enjoining him from violating antifraud provisions.

In Plain English

Imagine you're selling a used car. Instead of telling the buyer the true best offer you got from another dealer, you lie and say the offer is much lower. You then tell your buyer you're selling it for a higher price than you actually paid. This way, you pocket the difference and make it look like you got a good deal for the buyer, when really you just made extra money by being dishonest about the car's true market value.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Traders at Nomura Michael A. Gramins and his colleagues, Ross B. Shapiro and Tyler G. Peters, worked as senior traders on Nomura Securities International's residential mortgage-backed securities (RMBS) trading desk.
2. The Market for RMBS The RMBS and manufactured housing asset-backed securities (MHABS) traded were often illiquid, making it difficult for customers to determine accurate market prices. They relied on their broker, Nomura, for this information.
3. Misrepresenting Prices From January 2010 to November 2013, Gramins and his colleagues repeatedly lied to customers about the prices at which Nomura bought and sold RMBS and MHABS.
4. Concealing Spreads They also misled customers about the amount of profit, or 'spread,' Nomura earned from intermediating these trades, ensuring the firm made more money on each transaction.
5. Deceiving About Best Prices Gramins and his colleagues falsely assured customers they were getting the best available prices for their trades, when in reality, they were manipulating the information to their advantage.
6. Directing Subordinates The senior traders, including Gramins, coached and instructed subordinate traders on the desk to engage in the same deceptive practices, sometimes dictating the exact lies to tell customers.
7. Generating Extra Revenue Through these deceptive practices, both directly and by directing others, Shapiro, Gramins, and Peters generated over $7 million in additional revenue for Nomura.

The Enforcement Action

On January 28, 2025, the United States District Court for the Southern District of New York entered a final judgment against Michael A. Gramins, a former trader on Nomura Securities International's RMBS trading desk. The SEC's complaint alleged that Gramins made misrepresentations and omitted material information to investors to generate additional revenue for Nomura. The final judgment permanently enjoins Gramins from violating antifraud provisions of the federal securities laws, resolving the Commission's case against him. The SEC's complaint, filed on September 8, 2015, also charged Ross B. Shapiro and Tyler G. Peters with similar violations.

Named in this action: Michael A. Gramins, Ross B. Shapiro, Tyler G. Peters.

Original SEC litigation release ↗ · Browse all cases