Ex-IFS Securities trader Keith Wakefield committed securities and wire fraud when, as the broker-dealer’s head of fixed income, the Chicago resident made forbidden speculative trades and embezzled hundreds of thousands of dollars over a two-year period, an Illinois federal court jury found this week.
Wakefield had once been allowed to make speculative trades in Treasuries, but in late 2013, he lost $215,000 of IFS funds. He was then banned from speculative trading. From February 2014 onward, IFS leadership only allowed Wakefield to engage in riskless principal transactions associated with customer trades or limited proprietary hedging of the firm’s municipal bond inventory held at risk, according to
The U.S. District Court case included evidence from an August 2019 phone call with Wakefield and ex-IFS chief technology officer Kristiaan Sheedy, Law360 reported. Through the recording, according to the U.S. Attorney’s Office, the jury heard Wakefield himself describing how his trades worked and using the word “fraudulent.”
The jury deliberated for six hours on Wednesday before reaching its decision, Law360 reported. He was convicted of one count of securities fraud and three counts of wire fraud, according to the U.S. Attorney’s Office, which said each count is punishable by a maximum sentence of 20 years in federal prison. U.S. District Judge Steven C. Seeger did not immediately set a sentencing date.
As a result of Wakefield’s unauthorized trades and embezzlement, Atlanta-based IFS in August 2019 found itself unable to honor millions of dollars of fixed income securities trades. It declared bankruptcy in April 2020, according to the SEC’s complaint.
The U.S. Attorney’s Office confirmed that Wakefield had argued IFS could have limited the damage caused by his actions if it had closed his positions differently — akin to an arsonist who lights a forest fire and then complains the fire department wasted water putting it out, according to the U.S. Attorney’s Office.