(Adds attorney for Marshall declined to comment)
By Sarah N. Lynch
WASHINGTON Aug 7 The former chief executive and
an ex-trader for a defunct brokerage unit of ConvergEx Group LLC
have been indicted for allegedly bilking millions of
dollars from clients by charging hidden trading fees, the U.S.
Justice Department said Thursday.
The indictment, which was returned late on Wednesday and
made public on Thursday, charges former ConvergEx Global Markets
Ltd CEO Anthony Blumberg, 49, and Craig Marshall, 47, with
securities fraud, wire fraud and conspiracy to commit securities
and wire fraud.
The U.S. Securities and Exchange Commission on Thursday also
announced parallel civil charges against Blumberg, which were
filed in a federal court in Newark, New Jersey.
The charges against Blumberg and Marshall come after
ConvergEx Group LLC in December separately agreed to pay $150
million to resolve criminal and civil charges into the same
In addition, former company employees Jonathan Daspin and
Thomas Lekargeren also pleaded guilty to criminal conduct at the
Seth L. Levine, an attorney at Levine Lee LLP who represents
Blumberg, did not have any immediate comment on the charges.
Sean Casey, an attorney at Kobre & Kim LLP representing
Marshall, declined to comment.
The government's case centers on alleged illegal conduct
that took place at ConvergEx Global Markets Ltd, a now-defunct
brokerage unit previously registered in Bermuda.
Prosecutors claim that brokers routinely routed customers'
orders to the Bermuda-based unit so they could mark up or mark
down the price for executed orders.
From 2007 through 2011, they allege that Blumberg and
Marshall were able to hide these secret fees by falsifying
transactions reports that were sent to clients.
All told, the Justice Department said the "conspirators" in
the scheme pocketed about $5.2 million in "spread" from clients.
Prosecutors say Marshall and Blumberg, who also previously
served as managing director of the parent company, also violated
clients' instructions to provide "real time" trade data.
In the SEC's civil case against Blumberg, the agency alleges
that one victim of the scheme was a university that paid $93,000
in disclosed commissions, and another $543,000 in undisclosed
(Reporting by Sarah N. Lynch; Additional reporting by Jonathan
Stempel in New York; Editing by Eric Walsh and Andre Grenon)