Ex-Morgan Stanley executive guilty

BROOKLYN, N.Y., March 24 (UPI) -- A former executive director and head of domestic securities lending for Morgan Stanley was convicted of securities fraud conspiracy Tuesday in Brooklyn, N.Y.

Darin Demizio, who also was convicted of wire fraud and making a false statement to the FBI after a weeklong trial, faces up to 25 years on the fraud counts and five years on the false statement count.

The conviction is the 29th stemming from an ongoing industry-wide investigation into allegations of bribery and kickbacks in the securities lending industry, also called the "stock-loan" industry, the U.S. Justice Department said.

The department said 28 defendants previously pleaded guilty in Brooklyn, including former lending traders at A.G. Edwards and Sons Inc.; Janney Montgomery Scott LLC; JP Morgan Chase; Kellner Dileo & Co. Inc.; Oppenheimer & Co. Inc.; Morgan Stanley; National Investors Services, also known as TD Waterhouse; Nomura Securities International Inc.; Pax Clearing Corp.; PFPC Worldwide; Schonfeld Securities and Van der Moolen Specialists.

In the current case, the department said throughout the 1990s and up until 2003, Demizio allegedly directed Morgan Stanley securities lending business to smaller brokerage and finder firms in exchange for kickbacks to his father and his brother, Craig Demizio.

The kickbacks totaled more than $1.6 million between January 2000 and January 2004 alone, the department said. The payments were disguised as finder's fees, officials said.

Craig Demizio pleaded guilty to conspiracy to commit securities fraud and wire fraud, and was sentenced in July to 21 months.