Republic New York pleaded guilty in December to two felony counts after Martin Armstrong was charged with defrauding a group of Japanese investment clients out of hundreds of millions of dollars in a futures trading scheme.
The brokerage admitted that it permitted Armstrong to commingle client money to conceal losses from his trades and pleaded guilty to issuing statements overvaluing assets in his accounts.
Armstrong was accused of using new Japanese investor money to settle debts to previous investors, while racking up around $400 million in trading losses, which he allegedly concealed, Reuters reports.
Republic unit’s dealings with Armstrong were revealed when British bank HSBC Holdings was purchasing Republic for $10.3 billion from billionaire financier Edmond Safra.
HSBC cut its purchase price for Republic to $9.85 billion because of money it might have to put aside to settle the investigation, according to the Reuters report.