SEC Charges VCAP Securities & Brett Thomas Graham With CDO Fraud

Feb. 19, 2015 —The SEC charged VCAP Securities, an NYC based brokerage firm, and its CEO Brett Thomas Graham with fraud by deceiving investors in an auction to liquidate collateralized debt obligations (CDOs). The charge alleges that VCAP arranged for a broker-dealer to secretly bid at the auctions that it was prohibited from. VCAP was forbidden to bid on the CDO's it auctioned while serving as a CDO liquidation agent. VCAP had access to confidential bidding information that allowed them to win bids at prices only slightly higher than other bidders.

The firm and CEO have agreed to pay approximately $1.5 million to settle charges.

Here's a quote from Michael J. Osnato, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit:

Graham abused a position of trust by playing the roles of both conductor and bidder during CDO liquidation auctions to the detriment of other participants. The settlement requires Graham and VCAP to give up fees they obtained while conducting these unfair liquidations that landed certain bonds in their fund manager’s portfolio.

To read the order in full click here.