A Chicago fixed-income securities trader who next year will go on trial in criminal court for allegedly bankrupting his employer with fictitious trades has been ordered to pay $57 million by a Finra arbitration panel in connection with the case.
The trader, Keith Wakefield, did not participate in any of the Finra proceedings that began in April, including his answer to the initial claim, according to Finra documents.
The initial claim, filed by the liquidating trust for Wakefield’s former employer, IFS Securities in Atlanta, alleged that IFS had to shutter its operations as a direct result of Wakefield’s trading losses in Treasurys. The claim asked for $37 million to cover its losses, damages and attorneys’ fees, and another $20 million to cover claims by third parties in IFS’s bankruptcy case.
Wakefield could not be reached for comment. Attorney Holly Blaine of Blaine & Vanzant of Evanston, Ill., who was assigned as Wakefield’s defense attorney in his criminal case, court documents said, did not return a call by press time.
Attorney Richard Brodsky of Coral Gables, Fla., who represented IFS, would only confirm that his client won the award.
This award represents just one of four Finra arbitrations, SEC proceedings and criminal court proceedings surrounding the fraudulent scheme allegedly perpetuated by Wakefield when he worked at IFS from 2011 to 2019.
Wakefield, then 48, had been a managing director and head of fixed income trading at IFS, a registered broker-dealer. From June to August in 2019, he allegedly made a series of speculative trades in Treasurys on behalf of IFS despite company rules against such trades. He accumulated millions of dollars in losses, the SEC’s September 2021 complaint said. He then allegedly made another series of trades to falsely balance IFS’ exposure risk in order to avoid detection, the SEC said.
“Wakefield engaged in a variety of fraudulent practices to create the appearance of legitimate trading profits in order to disguise his unauthorized trading losses, including falsifying IFS’s books and records,” the complaint said.
In addition, from January 2017 to August 2019, he racked up $820,000 in commissions based on fictitious entries in IFS’s records, the SEC claimed.
In Wakefield’s criminal case, the U.S. Attorney’s Office for the Northern District of Illinois charged him with causeing more than $30 million in losses to IFS and its counterparties.