(Adds quotes from judge, details on crime)
By Andy Thibault
NEW HAVEN, Conn., April 26 (Reuters) - A federal judge in Connecticut on Wednesday sentenced a former Jefferies Group bond trader to serve two years in prison and pay a $2 million fine after he was found guilty earlier this year of defrauding customers on bond prices.
A jury in January found Jesse Litvak guilty of one of 10 criminal charges he had faced, a muted victory as prosecutors try to crack down on nefarious sales practices on Wall Street.
The verdict marked the second time that Litvak was found guilty of fraud. He was first tried and convicted in 2014 and sentenced to two years in prison, but that verdict and sentence were overturned on appeal.
Federal prosecutors had asked Judge Janet Hall to sentence Litvak to nine to 11 years in prison, while his defense attorneys had sought eight months of house arrest at his home in Boca Raton, Florida. Litvak had worked in the Stamford, Connecticut, office of Jefferies, a unit of Leucadia National Corp.
"Your victims were harmed by your lies," Hall told Litvak before sentencing him. "They would not have paid you what they paid you if you told the truth."
Litvak was stoic throughout the hearing, which lasted several hours, and showed no visible emotion when Hall handed down the sentence, which also called for three years' supervised release following his prison term. She ordered Litvak to report to prison by Sept. 22.
Prosecutors argued that a stiff sentence, even tougher than the one handed down for the previous conviction on all 10 counts, was needed to deter illegal tactics in the financial services industry.
Litvak, who had been a managing director at Jefferies, was accused of generating $2.25 million of illegal profit by misleading customers including AllianceBernstein and Soros Fund Management about bond prices from 2009 to 2011.
Prosecutors said Litvak was motivated by greed, and that his "lies" caused customers to overpay for bonds they bought and accept lower prices for bonds they sold.
Defense lawyers said, however, Litvak's customers were sophisticated, with a deep well of talent and resources, and would be skeptical if prices that Litvak quoted looked wrong.
Litvak was the first of at least eight traders criminally charged by federal prosecutors in Connecticut in a crackdown on abuses by bond trading desks. Three agreed to plead guilty, while three from Nomura Holdings Inc face a trial next month. (Writing by Scott Malone; Editing by Bernard Orr and Steve Orlofsky)