Law: Ex-Quant Analyst Indicted For Front-Running Employer’s Trades

  • General
  • September 24, 2021
  • 189
  • 5 minutes read

Insider trading is like the most common crime on Wall Street or the crime most prosecuted. Every now and then, there’s always a new insider trading case pursued by the appropriate American authorities; the Securities and Exchange Commission (SEC) and Justice Department (DOJ).


To the unaware, insider trading is deemed as trading a public company’s stock or other types of regulated securities based on material, nonpublic information about the company.

  • The latest insider trading saga now making the rounds is that of a former quant analyst who has just been indicted for front-running his employer’s trades and making a killing to the tune of over $8mn.
  • Sergei Polevikov, the former quant analyst, allegedly bought securities he knew his employer ordered in large blocks on behalf of clients and then profited from little price bumps of the securities that typically occurred when the large orders were executed. He’s said to have done this with a brokerage account opened in his wife’s name.
  • The employer of concern is OppenheimerFunds, an asset management firm managing over $200bn for clients. As Polevikov was an analyst there, he had insider knowledge of some trades the firm made on clients’ behalf and allegedly front-ran them to profit. According to his indictment, he got over $8.5mn in profits from 2014 to 2019.
  • Polevikov is charged with one count of securities fraud and one count of wire fraud. He was arrested on Wednesday night and scheduled to appear before a court for proceedings.
The bare bone of insider trading is trading based on nonpublic, privileged information, but it can come in many forms. Finance employers usually bar their employees from trading securities they have privileged information about to prevent cases like this. Still, it appears some people work hard to circumvent the ban and get caught in the act.
  • The ex-quant analyst is facing charges both from the Justice Department (DOJ) and SEC. As usual, the DOJ’s case may result in prison time, while the SEC’s may result in a monetary fine. Battling two three-lettered agencies is undoubtedly not the ideal position to be in.

                                               

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