Former TD Securities bond trader charged with alleged fraud in Treasuries market

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A former senior bond trader at TD Securities in New York has been charged with attempting to “deceive and defraud” the US Treasuries market in an alleged year-long scheme that involved placing a number of fake orders to create a false impression of true supply or demand to counterparties.

A federal indictment was unsealed on Wednesday charging 39-year-old Jeyakumar Nadarajah, who was head of the US Treasuries trading desk at the bank during the period in question, with 16 counts including wire fraud, securities fraud and securities manipulation.

The indictment alleged that between April 2018 and May 2019, Nadarajah engaged in “spoofing” and “layering”, by placing orders that he never intended to go through with on both the bid and offer sides of the market, in order to engineer a more favourable price for bond trades he would ultimately execute.

Nadarajah “intended to inject false and misleading information” about supply or demand for the fixed income products, the indictment stated, and to “manipulate and artificially increase” or decrease market prices.

Prosecutors said his aim was “to fraudulently induce other market participants to trade at prices, quantities and times that they otherwise would not have traded”.

The indictment did not list the institution where Nadarajah carried out the alleged fraud. He left TD Securities in 2019, according to his LinkedIn profile, and became executive director of US Treasuries trading at Wall Street bank Jefferies in 2020. Industry records showed he was employed at TD Securities at the time of the alleged fraud.

TD Securities, which is a subsidiary of the Canadian TD Bank, could not immediately be reached for comment. Jefferies declined to comment. A lawyer for Nadarajah did not immediately respond to a request for comment.

“Securities fraud and manipulation, as alleged here, victimise investors and degrade the integrity of our public securities markets,” said Nicole Argentieri, the Department of Justice’s acting assistant attorney-general of the criminal division.

She added: “The department will continue to protect our financial systems and investors by holding accountable those who violate our securities laws.”