Ex-CEO From Short Hills Guilty Of Securities Fraud: Prosecutor

SHORT HILLS, NJ — The former CEO of ConvergEx Global Markets Limited (CGM Limited), a resident of Short Hills, pleaded guilty on Tuesday in Newark federal court in connection with his role in a scheme to commit securities and wire fraud from 2006 through 2011, federal prosecutors said.

On Tuesday, Anthony Blumberg, 53, of Short Hills, pleaded guilty before a U.S. district court judge to conspiracy to commit securities and wire fraud.

Sentencing is scheduled for Dec. 5, prosecutors said.

According to prosecutors:

“CGM Limited was a wholly owned subsidiary of ConvergEx Group LLC (ConvergEx Group). As part of his plea, Blumberg admitted that clients placed orders to buy or sell securities with G-Trade Services LLC and ConvergEx Limited, subsidiaries of ConvergEx Group that offered global trading services to clients, which in turn routed orders to CGM Limited. Blumberg also admitted that Traders at CGM Limited executed the orders and sometimes added a “spread,” (a mark-down on the sale of a security or a mark-up on the purchase of a security) to the prices they had obtained for non-fiduciary clients.”

Prosecutors added:

“To hide the fact that spread had been taken, on several occasions from 2007 to 2011, Blumberg and traders acting under his direction, acting in response to requests by clients for information that could reveal the existence of spread, sent false reports (known as “time and sales reports”) to these clients. The false time and sales reports contained fabricated details regarding the individual transactions, or “fills,” executed during the course of a day to complete a client’s orders, including false information concerning the number of shares involved in a fill, the time at which the fill was executed, and the price at which shares were either purchased or sold.”

Blumberg also admitted that he and his conspirators agreed to violate a client’s instructions to provide real-time transactional data through an immediate data feed with details of trades that CGM Limited executed for the client by providing “batch fills” that hid the actual information the client sought, prosecutors said.

Blumberg is the fourth individual to plead guilty as a result of the investigation into ConvergEx Group and CGM Limited’s practices. On Dec. 18, 2013, CGM Limited pleaded guilty to conspiracy to commit securities and wire fraud before Judge Linares. On the same day, ConvergEx Group entered into a deferred prosecution agreement. Collectively, the two ConvergEx entities paid $43.8 million in criminal penalties and restitution, prosecutors said.

The case is being investigated by the FBI’s Washington Field Office and the Washington, D.C. and New York offices of the USPIS.

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