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Former Sterne Agee managing director admits to bribery scheme

Former Sterne Agee Managing Director Deborah Kelley has pleaded guilty to bribery allegations.

Acting U.S. Attorney for the Southern District of New York Joon Kim said Kelley admitted in participating in a "pay-to-play" bribery scheme from 2014 through 2016. Kelley provided entertainment, travel and meals to Navnoor Kang, former director of fixed income and head of portfolio strategy for the New York State Common Retirement Fund in exchange for fixed-income business.

As a result of the scheme, Sterne Agee's domestic bond transactions with the fund totaled approximately $156 million and $179 million for the fiscal years ending in March 2015 and March 2016, respectively. The company had no transactions with the fund in the fiscal year ending in March 2014. The trades resulted to hundreds of thousands of dollars in commissions to the broker, with Kelley earning approximately 35% to 40%.

In addition, Kelly pleaded guilty to committing conspiracy to commit securities fraud and honest services wire fraud after attempting to conceal the bribery scheme with Kang during a 2015 and 2016 investigation led by the Securities and Exchange Commission.

In December 2016, a former vice president of fixed income sales at another New York-based broker, Gregg Schonhorn, also pleaded guilty for his participation in the bribery scheme.

Charges of conspiracy, securities fraud, honest services wire fraud and obstruction of justice against Kang are currently pending.