A former quant was charged in an $8.5 million insider trading scheme that included making more than 3,000 fraudulent trades from his wife's brokerage account
- A former Wall Street quant analyst was charged by the SEC in an $8.5 million insider trading scheme on Thursday.
- Sergei Polevikov allegedly placed nearly 3,000 front-running trades in his wife's brokerage account.
- The SEC discovered the scheme by using data analysis tools to detect suspicious patterns in trading activity.
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A former Wall Street quant analyst was charged with pulling off a $8.5 million insider trading scheme by placing nearly 3,000 trades in his wife's brokerage account, according to a Thursday complaint from the SEC.
Sergei Polevikov allegedly utilized real-time, non-public information about the timing and size of his employers' security trades to front-run the orders and make a quick profit.
The defendant would rarely hold onto the positions for more than a day, and was able to capitalize on small-time movements in stocks at the expense of his employer's clients.
Polevikov, 48, of Port Washington, New York, formerly worked as a senior quantitative analyst at OppenheimerFunds. He was arrested on Wednesday on charges of securities, wire, and investment company fraud.
In one example of the illicit trades, the SEC says Polevikov purchased 400,000 shares of stock in a Brazilian bank ahead of a nearly 8 million-share purchase made by OppenheimerFunds. The defendant then sold the stock for a near $100,000 profit.
Polevikov concealed his alleged trading scheme by placing the front-running trades in his wife's investment account, who uses a different last name. The SEC utilized data analysis tools to detect suspicious trading activity patterns, "such as improbably successful trading across different securities over time," the regulator said.
Polevikov's lawyer Brooke Cucinella said, "the government has it wrong" and that her defendant plans to fight the charges. Polevikov's bail was set at $1.5 million, and he faces up to 20 years in prison. Polevikov's wife, Maryna Arystava, was sued by the SEC as the agency seeks the return of the alleged illicit profits, along with civil penalties.