A former Cantor Fitzgerald & Co. bond trader was indicted by a federal grand jury in New Haven, Conn., on charges that he cheated customers by citing false prices to induce them to buy and sell residential mortgage-backed securities.

David Demos of Westport, Conn., quoted inflated purchase prices for the bonds Cantor Fitzgerald could buy, motivating customers to pay a higher price. He also got customers to sell bonds at cheaper prices to Cantor Fitzgerald by "fraudulently deflating" the value of the bonds, the court said. Demos and the company are said to have turned profits from the transactions. Customers who suffered millions of dollars in losses included asset managers and firms associated with entities benefiting from the Troubled Asset Relief Program, according to the court.

In a similar case in 2013, the Securities and Exchange Commission charged a former Jefferies & Co. Inc. executive with selling MBS at inflated prices and swindling customers in the wake of the 2008 financial crisis. Jesse Litvak made personal gains and also helped the company generate more than $2.7 million in revenue from 2009 to 2011.

The indictment is part of ongoing efforts to investigate fraud in the RMBS market that may have caused the financial crisis, the court said. Demos was involved in the fraudulent activities when he was a trader and managing director at Cantor Fitzgerald between November 2011 and February 2013, when he was terminated, the court said. Demos was indicted on six counts of securities fraud.