SEC used CAT database to uncover $47m front-running scheme by Nuveen trader

Rick Steves

“Billimek allegedly took advantage of his position and abused his employer’s trust by providing Williams with proprietary information that allowed them to gain a trading advantage and pocket tens of millions of dollars in profits. As today’s action shows, SEC staff will utilize data analytics tools at our disposal to find and charge those who engage in illegal trading of securities.”

The Securities and Exchange Commission has charged Lawrence Billimek and Alan Williams for perpetrating a multi-year front-running scheme that generated at least $47 million in illegal trading profits.

The SEC’s complaint charges Billimek and Williams with violating the antifraud provisions of the federal securities laws.

Lawrence Billimek was a trader at Nuveen, a major asset management firm founded in 1898 and employing 3,000 people. Nuveen reported assets under management of $1.2 trillion as of June 30, 2021.

Billimek would inform Williams of Nuveen’s trades prior to execution

According to the SEC’s complaint, since at least September 2016, Billimek would inform Williams of the asset management firm’s market-moving trades prior to their execution.

On the same day, Williams would trade in the same securities prior to Billimek’s employer or while multiple large orders were being placed by the employer, the SEC alleged, adding that Williams would close his positions after the price of the security moved as expected.

The front-running scheme resulted in proceeds of more than $47 million, according to the agency claims after having analyzed trading using the Consolidated Audit Trail (CAT) database to uncover William’s allegedly fraudulent trading and to identify how he profited by repeatedly front-running large trades by Billimek’s employer.

Joseph G. Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, said: “Billimek allegedly took advantage of his position and abused his employer’s trust by providing Williams with proprietary information that allowed them to gain a trading advantage and pocket tens of millions of dollars in profits. As today’s action shows, SEC staff will utilize data analytics tools at our disposal to find and charge those who engage in illegal trading of securities.”

Besides the civil charges by the SEC, both defendants are facing criminal charges in Manhattan, covering conspiracy, securities fraud, and wire fraud.

A Nuveen spokesperson said the company immediately placed Lawrence Billimek on leave once it learned of charges against him and began its own review. The company is cooperating with authorities.

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