MORE "MORALS OF THE MARKETPLACE"

This is a nice follow-up to the naked short selling post.

NY jury convicts ex-Morgan Stanley exec
Tue Mar 24, 2009 9:04pm EDT

LOS ANGELES (Reuters) - A New York jury on Tuesday convicted a former Morgan Stanley Co supervisor of securities fraud and other charges for his part in a kickbacks scheme involving the stock-loan industry.

After a weeklong trial, Darren DeMizio was convicted of conspiring to commit securities fraud and wire fraud, and of making a false statement to FBI agents, prosecutors said.

Twenty-eight other individuals, including DeMizio's brother, have pleaded guilty to charges stemming from the scheme, in which securities traders accepted millions of dollars in kickbacks for themselves or family members from stock-loan "finders."

Securities firms often borrow and loan securities among themselves to facilitate short-sale transactions. Stock-loan finders help the firms locate inventories of a stock and match borrowers and lenders.

DeMizio, formerly the head of Morgan Stanley's domestic securities lending desk, was accused of routinely directing Morgan Stanley stock-loan business to two stock finders in exchange for kickbacks and bribes paid to his brother and father from the 1990s through 2003.

The payments, which totaled $1.6 million from 2000 to 2004 alone, were disguised as finders' fees.

The investigation into bribery and kickbacks resulted in guilty pleas by traders at A.G. Edwards, Janney Montgomery Scott LLC, JPMorgan Chase & Co, Kellner Dileo & Co Inc and Oppenheimer & Co.