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Long Island resident Sergei Polevikov, age 48, of Port Washington, has been charged with securities fraud, wire fraud, and investment company fraud in connection with his scheme to misappropriate confidential information about pending trades by his employer, an investment adviser, on behalf of its investment company clients.
US Attorney Audrey Strauss said that Polevikov was arrested on Wednesday, Sept. 22, and scheduled to make his initial court appearance on Thursday, Sept. 23.
It is alleged that between 2014 and October 2019, Polevikov was employed as a quantitative analyst at an asset management firm with headquarters in Manhattan.
As part of his job, Strauss said that Polevikov had access to information regarding potential securities trades his firm’s clients were considering, including multiple investment companies.
According to the indictment, Polevikov “engaged in a front-running scheme to misappropriate confidential, material, nonpublic information about the securities trade orders of (his company) on behalf of its clients in order to engage in short-term personal securities trading in a brokerage account opened in his wife’s name.”
Strauss said that Polevikov's scheme was “designed to profit by executing trades that take advantage of relatively small price movement’s in a company’s stock.
In total, Polevikov pocketed more than $8.5 million through the fraudulent scheme.
Prosecutors said that in an effort to conceal his scheme, Polevikov lied to his employer about his trading accounts and securities trades that were in violation of the Investment Company Act.
“Using material, nonpublic information to exploit small price movements in his employer’s stock, Polevikov, as we allege, realized significant financial gains for himself through his trades,” FBI Assistant Director Michael Driscoll said.
“While these schemes are unfortunately all too common, so is the response of the FBI – if you misappropriate proprietary information for your own personal gain, you should expect to hear from us.”
Polevikov was charged with one count of securities fraud, one count of wire fraud, and one count of investment company fraud. If convicted, he faces up to 20 years in prison.
“As alleged, Sergei 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, reaping more than $8 million in illicit profits,” Strauss said.
“Despite his alleged efforts to conceal it, Polevikov’s scheme was uncovered, and he is facing serious federal charges.”
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