SEC charges quant analyst for $8.5 million front-running scheme

Rick Steves

The front-running scheme was allegedly concealed by executing the trades in the account of his wife, Maryna Arystava, who uses a different last name. This potentially allowed the fraud to last longer.

The Securities and Exchange Commission has pressed charges against Sergei Polevikov for a years-long front-running scheme worth at least $8.5 million in illicit profits.

Sergei Polevikov worked as a quantitative analyst at two prominent asset management firms, including OppenheimerFunds, having access to real-time, non-public information about the size and timing of his employers’ securities orders and trades.

He used that information to secretly trade on, and ahead of, his employers’ trades from at least January 2014 through October 2019, according to the SEC’s complaint.

His lawyer, Brooke Cucinella, said her client was “surprised by the charges, and intends to defend against them vigorously […] The government has it wrong.”

At an initial appearance in Manhattan federal court, Polevikov learned that his bail requires him to post $1.5 million in cash or property, though he was freed immediately. His spending will be limited to $10,000 monthly and $500,000 was allowed for legal fees, according to the Associated Press.

On nearly 3,000 occasions, Polevikov allegedly bought or sold a stock on the same side of the market as his employers before his employers executed trades in the same stock for their fund clients and would close his positions the same day as he opened them, capitalizing on the price movement caused by his employers’ large trades.

The front-running scheme was concealed by executing the trades in the account of his wife, Maryna Arystava, who uses a different last name. This potentially allowed the fraud to last longer.

Polevikov is charged with violating the antifraud and reporting provisions of the federal securities laws. The SEC seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief. The complaint also names Arystava as a relief defendant.

The SEC’s Market Abuse Unit’s Analysis and Detection Center, which uses data analysis tools to detect suspicious patterns, such as improbably successful trading across different securities over time, spotted Polevikov’s trading activities which consistently generated small profits that added up to a total of at least $8.5 million over the course of the scheme.

Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit, said: “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.”

The U.S. Attorney’s Office for the Southern District of New York also announced related criminal charges against Polevikov.

Read this next

Industry News

Robinhood posts strong numbers amid growth in funded accounts

Robinhood, one of the largest trading platforms in the US, has announced the results of the third quarter which shows some robust growth even though the company did not push ahead with any major plans related to crypto.

Inside View

MetaTrader 4 – What Is It?

MetaTrader 4 is the most widely used Forex platform among brokers. What are the platform’s primary features?

Digital Assets

BlockBank launches DeFi application with Robo Advisor

BlockBank, a large mobile banking platform, has announced the launch of its DeFi application which will combine decentralized finance with AI-powered technology to help traders and investors make better trading decisions in the crypto market.

Digital Assets

eToro announces crypto staking and underlying assets for Australians

Australian users opening cryptoasset positions on eToro can now purchase the underlying asset. Soon eToro will enable coin transfers from the eToro platform to the eToro Wallet.

Digital Assets

EQONEX announces international sales team to show off digital asset offering

“It is time to show the world the quality of the EQONEX group offering, and I am excited to welcome such a high caliber group of salespeople to the organization”.

Retail FX

Webull donates 8,000 Brooklyn Nets tickets to New Yorkers

“The entire Webull team is thrilled that our first-ever sports partnership is with the Brooklyn Nets, who are only five subway stops from our headquarters in New York.”

Digital Assets

AEX integrates with fiat and crypto custodians Banxa and Xanpool

Spot trading, flexible savings, DeFi mining, are several ways AEX Global allows users to participate in the wider crypto space.


Barchart launches Microsoft Excell add-in

“Whether looking to perform their own analysis, add other data sources, build macros or anything else leveraging the powerful features of Excel, we now provide that ability.”

Retail FX

Inceptial expands Belarussian FX broker into China and Japan

“We are fully aware of the needs, customs, aspirations and limitations of the different markets of Asia, after careful research. We look forward to sharing our success with our new Asian partners on this journey.”