(Bloomberg) -- A former TD Bank trader charged with spoofing US Treasuries asked a federal judge to throw out the case, saying the government’s announcement of a settlement with the bank effectively denied him the right to a fair trial.
Jeyakumar Nadarajah, who was once TD Bank’s head of US Treasuries trading, was indicted in November 2023 on 16 counts of fraud and securities manipulation for allegedly placing “spoof” orders to artificially drive up prices. TD Bank last month agreed to pay more than $20 million as part of an agreement with US prosecutors and regulators to resolve investigations into Nadarajah’s behavior.
But Nadarajah’s lawyers said in a court filing that the government’s announcement of the deal turned “the constitutional right to a fair trial on its head” by telling the world that the trader was guilty. Prosecutors violated Justice Department policy by issuing opinions about a defendant before trial without inserting language indicating that Nadarajah is presumed innocent, according to the filing.
“Mr. Nadarajah has, of course, pleaded not guilty to the offenses and is exercising his right to a jury trial; nonetheless, the government has taken the extraordinary step of appointing itself the decider of fact and law, displacing both the jury and the court, and announced to the world that Mr. Nadarajah is guilty,” his lawyer, William A. Burck, said in the filing in federal court in New Jersey.
Several traders have faced prosecution in recent years for spoofing, the act of placing and then canceling an order to create a false impression to other market participants. Nadarajah is facing as much as 20 years in prison for each count of wire fraud, securities fraud and securities manipulation if convicted at his trial next year.
Prosecutors and TD Bank declined to comment on the filing.
He said TD Bank’s settlement contains a “draconian threat” that would put “intense and improper” pressure on employees who might be called as witnesses in Nadarajah’s case because they are represented by the same lawyers as the bank who negotiated the agreement with the government and may be urged to “testify to exactly what the government has alleged and must prove to convict Mr. Nadarajah.”
“Mr. Nadarajah believes that, if those witnesses answer truthfully, they will contradict prior information that they provided to the government, particularly after-the-fact information and opinions about Mr. Nadarajah’s trading,” according to the filing.
The 14-page indictment doesn’t name the financial institutions where Nadarajah has worked, but industry records show he was at TD Bank at the time of the alleged conduct and most recently at Jefferies.
TD Bank’s resolution of the spoofing probe came just a week before it pleaded guilty in an unrelated case of failing to prevent money laundering and agreed to pay almost $3.1 billion in fines and other penalties.
The case is US v Nadarajah, 23-cr-891, US District Court, Southern District of New York.
(Adds that TD Bank declined to comment)
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