Jonathan Daspin, Thomas Lekargeren, and ConvergEx Subsidiaries Charged with Fraud
ConvergEx Group subsidiaries, Jonathan Daspin, and Thomas Lekargen were charged with fraud by the Securities and Exchange Commission, for deceiving customers about their commissions and causing them to pay substantially higher amounts that the disclosed values of commissions.
The clients paid millions of dollars in unjustified trading fees, according to the charges. The ConvergEx subsidiaries agreed to pay more than $107 million and admit wrongdoing. Daspin and Lekargin agreed to plead guilty to the fraud charges.
Criminal charges were also filed against Convergex Group, a brokerage subsidiary, as well as Daspin and Lekargen. To settle the criminal charges ConvergEx agreed to pay $43.8 million in criminal penalties and restitution.
ConvergEx Group brokerages misrepresented the amounts of commissions they charged to execute equity trading orders on behalf of their clients, according to the allegations.
ConvergEx routinely routed orders, including U.S. equities orders, to an offshore affiliate in Bermuda, which, in turn, executed orders on a riskless basis, adding mark-ups or mark-downs on the security prices to boost profits, causing clients to pay more than twice what they understood they were paying.
ConvergEx’ customers include funds managed on behalf of charities, religious organizations, retirement plans, universities, and governments.
Taking steps to hide their scheme, the accused parties conducted customer-detection assessment before deciding to take the extra money, issued false trading data, made false and misleading statements to customers regarding their compensation and omitted to fully disclose the practice of routing orders to an offshore affiliate, according to the charges.
After admitting that they violated federal securities laws, they agreed to pay $87,424,429 in disgorgement and prejudgment interest and $20 million in penalties. ConvergEx’ cooperation were all considered in determining the penalty, according to the prosecutors.
Daspin and Lekargeren admitted to taking steps to conceal the practice of taking trading profits from customers. They agreed to pay a total of $1,111,550 and $117,042 in disgorgement and prejudgment interest, respectively.
The SEC seeks to return the money collected in these settlements to harmed customers through a Fair Fund distribution.
The Peiffer Wolf securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting investors with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Wolf, Jason Kane or Joe Peiffer, for a free, no obligation evaluation of their recovery options, at 585-310-5140.