The US Securities and Exchange Commission (SEC) announced on Thursday that it charged Sergei Polevikov, a former quantitive analyst, for having operated a front-running scheme. According to the press release, Polevikov worked at ‘two prominent asset management firms,’ and such a scheme generated illicit profits of $8.5 million.
From at least January 2014 through October 2019, the former quantitive analyst had privileged access to his employers’ securities orders and trades with the purpose of trading on his scheme. Court documents filed before the US District Court for the Southern District of New York alleged that on nearly 3,000 occasions, Polevikov bought or sold a stock on the same side as his employers were trading.
“Polevikov typically would close his positions the same day as he opened them, capitalizing on the price movement caused by his employers’ large trades. The SEC alleges that Polevikov concealed his fraudulent scheme by executing the trades in the account of his wife, Maryna Arystava, who uses a different last name,” the SEC noted in the announcement.
SEC Seeks Injunctive Relief
That said, Polevikov was charged with violating the antifraud and reporting provisions of the federal securities laws. So now, the US SEC seeks disgorgement of ill-gotten gains, plus interest, penalties, and injunctive relief. “As alleged in our complaint, Polevikov abused his position as a quantitative analyst and his employers’ trust by repeatedly trading ahead of large trades that the firms placed for advisory clients. Although Polevikov allegedly tried to hide his misconduct by using his wife’s account, SEC analysts were able to uncover this deceptive scheme by identifying a consistent pattern of profitable trading in coordination with the employers’ trades,” Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit, commented.
Recently, the US SEC obtained emergency relief in a millionaire Ponzi scheme case and filed charges against an investment adviser involved in the saga.
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