Brokerage CEO Arranged For Secret Bids During CDO Auction, SEC Says

A New York-based brokerage firm and its CEO have been charged with deceiving other market participants while conducting auctions to liquidate collateralized debt obligations. An investigation by the Securities and Exchange Commission said that VCAP Securities and Thomas Graham arranged for a third-party broker-dealer to secretly bid at these auctions. VCAP had access to all confidential information and Graham exploited it to ensure the third-party bidder won the bonds at prices only slightly higher than other bidders. VCAP and Graham agreed to pay $1.5 million and Graham is barred from the securities industry for at least three years.