Bermuda stockbroker Paul Lemmon, who allegedly conspired with former Toronto brokerage star Mark Valentine in an illegal kickback scheme, has reached a plea agreement with the US Department of Justice.

Canadian newspaper The Globe and Mail reported that Mr. Lemmon, who ran financial services firm the Voyager Group in Bermuda, pleaded guilty to one count of conspiracy to commit wire and securities fraud.

Under the agreement, filed in the United States District Court for the Southern District of Florida, the government has agreed to drop two additional counts of securities fraud after sentencing, which is scheduled for February.

Mr. Lemmon pledged to cooperate with authorities in their investigation.

Mr. Lemmon and Mr. Valentine were among more than 50 people charged this summer in connection with Operation Bermuda Short, a two-year undercover investigation into alleged securities fraud by the Federal Bureau of Investigation and the Royal Canadian Mounted Police.

Mr. Lemmon and Mr. Valentine were accused of agreeing to pay $7.8 million (US) in kickbacks to undercover agents posing as crooked mutual fund sales agents. Mr. Valentine, the former chairman of brokerage firm Thomson Kernaghan & Co. Ltd., has been released on bail and is currently in Florida.

Mr. Valentine has been under intense scrutiny since at least last June, when the Ontario Securities Commission alleged that he improperly traded technology stocks listed on the Nasdaq Stock Market's largely unregulated over-the-counter market.

Allegations of trading irregularities hurt the firm, which filed for bankruptcy in July. This month, Mr. Valentine and 46 former officials of the firm were named in a $76-million lawsuit by the bankruptcy trustee overseeing the firm's liquidation.

In documents filed with the Ontario Superior Court, trustee Ernst & Young Inc. alleged that "acts and omissions" of Mr. Valentine and other officials contributed to the firm's collapse.

Mr. Valentine has pleaded not guilty in the US and has denied the OSC allegations.