Litvaking and Lending

No Litvak.

Is it fraud for a bond trader to lie to customers about the price that he paid for a bond? It is a complex question. On the one hand, lying is bad, and the market price of a bond seems like it would be important information for someone who might buy the bond. On the other hand, maybe it's not actually that important: What matters is what the customer is willing to pay, not what the trader paid, plus if everyone in the bond market is constantly trying to take advantage of one another then the customer probably won't believe the lies anyway. Those were the issues in the lying-about-bonds trial of Jesse Litvak, and while he was ultimately convicted of one count of fraud, his jury seems to have been persuaded that bond buyers don't usually expect salespeople to tell them the truth. Litvak's error was not just lying, but altering a document to do so; customers expect some puffery, but not outright forgery.