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Regulation and Compliance > Litigation

Ex-OppenheimerFunds Analyst Charged With $8.5M Insider Trading Scheme  

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What You Need to Know

  • The ex-OppenheimerFunds analyst faces up to 45 years in prison on fraud charges.
  • He is accused of front-running large trades by the firm and profiting off of the price movement.
  • After leaving OppenheimerFunds, he went on to co-found the health tech firm WellAI and serves as its CEO.

A former OppenheimerFunds analyst faces up to 45 years in prison after being charged with securities fraud, wire fraud and investment company fraud in connection with his alleged scheme to misappropriate confidential information about pending trades by his employer on behalf of its clients.

Sergei Polevikov, 48, of Port Washington, New York, was arrested Wednesday night and appeared before Magistrate Judge James L. Cott in U.S. District Court for the Southern District of New York on Thursday, according to Audrey Strauss, the U.S. attorney for the Southern District of New York in Manhattan.

He was released on $1.5 million in bail and a preliminary healing is scheduled for Oct. 25, according to court documents.

According to the complaint filed Tuesday and unsealed Thursday, Polevikov was charged with one count of securities fraud, one count of wire fraud and one count of investment company fraud.

Polevikov, who also co-founded the health care tech firm WellAI in 2019 and serves as its CEO, faces a maximum sentence of 20 years in prison on each of the securities fraud and wire fraud charges, and five years in prison on the investment company fraud charge, according to Strauss.

The Securities and Exchange Commission filed a related civil action against Polevikov in the same court on Thursday.

Polevikov worked for OppenheimerFunds, which was acquired by Invesco in 2018, for more than 15 years, from 2004-2019, first as a senior risk analyst, then as a portfolio manager and director of asset allocation research, according to his LinkedIn profile. Most recently, his role was quant analyst, according to Invesco.

“Invesco provided the government with information in connection with the investigation and will provide any additional assistance requested by the government in connection with its pursuit of the matters initiated today against this individual,” Invesco spokeswoman Jeaneen Terrio told ThinkAdvisor on Friday.

Polevikov, his attorney and WellAI did not immediately respond to requests for comment.

“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,” according to Strauss.

In his role at OppenheimerFunds, Polevikov had regular access to information regarding contemplated securities trades on behalf of the employer firm’s clients, which included investment companies, according to the complaint, which did not mention OppenheimerFunds by name.

During his time at the firm, he engaged in a front-running scheme to misappropriate confidential, material, nonpublic information about the securities trade orders of the OppenheimerFunds on behalf of its clients to engage in short-term personal securities trading in a brokerage account opened in his wife’s name, according to the complaint.

His scheme was designed to profit by executing trades taking advantage of relatively small price movements in a company’s stock that followed from large securities orders executed by the firm on behalf of its clients. In total, his scheme allegedly yielded more than $8.5 million in illicit profits.

To conceal his front-running scheme, he allegedly lied to the firm about his personal trading accounts and securities trades conducted, in violation of the Investment Company Act.