Joseph Jett

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Joseph Jett was a government bond trader at Kidder, Peabody & Co., who was responsible for a large trading fraud involving US Treasury bond strips. Jett effectively exploited an internal flaw in the firm's accounting system which overvalued certain transactions (forward reconstitutions of treasury bonds). By trading this type of transaction in large size, over the period 1990-1994, Jett was able to book hundreds of millions of what appeared to be trading profits, that in fact were simply accounting errors.

After the scheme was discovered in 1994, his employer reversed over $300 million in trading profits that Jett had fraudulently booked. In 2004, the Securities and Exchange Commission ordered Jett to forfeit $8.2 million in fraudulently-obtained bonuses, fined him $200,000 and barred him from any future association with financial trading.^[1]

He later opened his own investment banking firm and, in spite of the ban, gave the appearance of still dealing in securities.^[2] While the website Jett operated claimed to offer asset management and investment banking services, it is not clear if any such business was ever done, as doing so would expose Jett to further criminal charges. In a 1999 interview with online magazine Salon, Jett claimed to own an offshore hedge fund called Cambridge Matrix ^[3]. However, curiously, this is also the name of the publishing house of his autobiography "Broken Bonds"^[4].

In September 2007 the SEC released an enforcement action against Jett ^[5], and in March 2008 the website related to Jett's firm has been closed.