U.S. prosecutors have recommended that Jesse Litvak, the former Jefferies Group Inc trader convicted of defrauding investors in mortgage bond trades after the financial crisis, be sentenced to nine years in prison and a $5 million fine.
Litvak's lawyers countered by requesting a maximum 14-month sentence, saying their client does not deserve a prison term "approaching those of the worst white collar offenders in recent history."
They also said no restitution was justified, and that Litvak, 39, a married father of two, derived no personal gain from his activities.
Both requests were made on Friday with the U.S. District Court in New Haven, Connecticut, where Litvak is scheduled to be sentenced on July 23 by Chief Judge Janet Hall. Litvak has also sought to have his conviction voided.
Prosecutors accused Litvak of swindling customers out of more than $2 million from 2009 to 2011 by inflating bond prices, lying about what Jefferies paid for bonds and inventing sellers.
On March 7, jurors convicted Litvak on all 15 counts he faced, including 10 counts of securities fraud.
The prosecution was the first under a law banning major fraud against the United States through the $700 billion federal bailout known as the Troubled Asset Relief Program. That law was invoked because some of Litvak's clients joined a TARP initiative designed to revive the mortgage bond market.
Jefferies, a unit of Leucadia National Corp, agreed five days after the verdict to enter a nonprosecution agreement and pay $25 million to settle criminal and civil probes into its alleged failure to properly supervise traders.
In their sentencing request, prosecutors said Litvak "knew that lying to customers and ripping off their investors was both immoral and criminal, and simply did not care."
They said stiff punishment was needed to deter others in the industry from believing that such fraud is "business as usual."
Litvak's lawyers have argued that his former clients were sophisticated enough to know whether they were traded fairly, and that the defendant's activity was common in the industry.
The request for leniency was backed by more than 100 letters submitted on Litvak's belief.
Ross Garber, a lawyer for Litvak, did not immediately respond on Monday to requests for comment.
The case is U.S. v. Litvak, U.S. District Court, District of Connecticut, No. 13-cr-00019.
(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)