(Bloomberg News) A former bond trader pleaded guilty in New Jersey yesterday, admitting he manipulated the prices of collateralized mortgage obligations to conceal trading losses, U.S. Attorney Paul Fishman said in a statement.
Douglas Green, 47, pleaded guilty to securities fraud in federal court in Trenton, N.J., the statement said. He worked at Crocker Securities, a broker-dealer that used the clearing services of Pershing LLC in Jersey City, N.J. Green managed an account that "suffered significant trading losses" in 2004 that worsened through 2008, Fishman said.
To conceal the losses, he entered fraudulent transactions to boost the price of CMOs to correspond to increasing losses in the Crocker trading accounts, the statement said. As a result of Green's fraudulent trading activity, the price of CMOs was inflated, and Pershing lost more than $9 million when it had to liquidate positions in the Crocker account, the statement said.
"Green engaged in a multi-million dollar coverup," Fishman said in the statement. "He manipulated prices of CMOs to conceal major trading losses by creating fictitious transactions at artificial prices. As a result of Green's deception, Pershing lost approximately $9 million."
Green faces as many as 20 years in prison. He is scheduled to be sentenced on July 22. Green lives in Parkland, Fla.
His attorney, Jeffrey Cox of Boca Raton, Fla., didn't immediately return a call seeking comment.
The case is United States v. Douglas Green, 11-cr-207, U.S. District Court, District of New Jersey (Trenton).