NEW YORK : A former Wall Street quantitative analyst was charged on Thursday with insider trading for making nearly 2,900 trades after learning his employer would soon make the same trades for clients, known as front-running.
The U.S. Department of Justice said Sergei Polevikov, 48, of Port Washington, New York, generated more than US$8.5 million of illegal profit from trades he conducted from January 2014 to October 2019 through his wife's brokerage account.
Lawyers could not immediately be identified for Polevikov, who was arrested on Wednesday night. Polevikov worked for OppenheimerFunds during the alleged front-running, according to a public records search.
According to prosecutors, Polevikov's trades were designed to take advantage of small stock price movements he expected to occur that day once his employer filled large client orders.
In a related civil complaint, the U.S. Securities and Exchange Commission said 2,858 of Polevikov's 2,874 overlapping trades were in the same direction as his employer's.
The Justice Department charged Polevikov with securities fraud and wire fraud, each of which carries a maximum 20-year prison term, and investment company fraud.
Polevikov "violated not just the terms of his employment but also the law when he exploited material, nonpublic information to make personal trades ahead of large institutional trades," U.S. Attorney Audrey Strauss in Manhattan said in a statement.
According to his LinkedIn page, Polevikov left OppenheimerFunds in October 2019, five months after it was acquired by Invesco Ltd from MassMutual.
He is now chief executive of WellAI, a Wyoming-based health and technology company he co-founded last year.
WellAI and Invesco did not immediately respond to requests for comment.
(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis)