A federal grand jury in the US has returned an indictment charging Jeyakumar ‘Jack’ Nadarajah, formerly TD Securities’ head of US Treasury trading, with a scheme to manipulate the US Treasuries market. The Justice Department notes, “All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.”
“Securities fraud and manipulation, as alleged here, victimise investors and degrade the integrity of our public securities markets,” said acting assistant attorney general Nicole Argentieri, of the Justice Department’s Criminal Division. “The department will continue to protect our financial systems and investors by holding accountable those who violate our securities laws.”
According to court documents, between approximately April 2018 and May 2019, Nadarajah, who was employed as a director at a bank in New York and head of the desk that was responsible for trading US Treasuries, allegedly engaged in a scheme to mislead market participants in the secondary cash market for US Treasuries.
According to his Linkedin profile Nadarajah became executive director for US Treasury Trading at Jefferies in 2020, and was head of US Treasury trading at the TD Securities during the period the allegations refer to.
Nadarajah is alleged to have engaged in a spoofing and layering scheme that involved placing orders that he did not intend to execute in order to create the appearance of false supply and demand, and to fraudulently induce other market participants to trade at prices, quantities, and times that they otherwise would not have traded.
“There’s money to be made in the financial markets,” said Eric Shen, inspector in charge of US Postal Inspection Service (USPIS) Criminal Investigations Group. “And if there’s money to be made, it means that fraudsters are right there looking to take advantage of other market participants. Whether it’s a simple investment scam or a complex scheme like the one Mr. Nadarajah allegedly tried to pull off, Postal Inspectors are there to bring the scammers to justice.”
Nadarajah is charged with two counts of wire fraud, seven counts of securities fraud, and seven counts of securities manipulation. If convicted, he faces a maximum penalty of 20 years in prison for each count of wire fraud, securities fraud, and securities manipulation.
USPIS is investigating the case, while assistant chief, Scott Armstrong, and trial attorney, John Liolos, of the Criminal Division’s Fraud Section are prosecuting the case.
