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Regulation and Compliance > Litigation

Ex-OppenheimerFunds Analyst Pleads Guilty to Securities Fraud

By Jeff Berman

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What You Need to Know

  • The ex-OppenheimerFunds analyst was charged in September with securities fraud, wire fraud and investment company fraud.
  • He pleaded guilty to one count of securities fraud on Wednesday, according to court documents.
  • He is scheduled to be sentenced on April 12, 2022.

The former OppenheimerFunds analyst who was charged in September with securities fraud, wire fraud and investment company fraud for allegedly misappropriating confidential information about pending trades by his employer on behalf of its clients has pleaded guilty to one count of securities fraud, according to court documents.

Sergei Polevikov of Port Washington, New York, was arrested in September and pleaded guilty in Manhattan federal court on Wednesday before U.S. District Judge Lewis J. Liman.

“As he admitted in court today, Sergei Polevikov broke the law when he exploited material, nonpublic information to make personal trades ahead of his employer’s large institutional trades,” Damian Williams, U.S. attorney for the Southern District of New York, said in a statement.

As part of his plea agreement, in which he changed his plea from not guilty, Polevikov agreed to forfeit $8.6 million on or before April 1, 2022. He is scheduled to be sentenced by Liman on April 12, 2022, Williams said.

Front-Running Scheme

According to the information to which Polevikov pleaded guilty, the complaint that was filed in the case, and statements made during court proceedings, from at least in or about 2014 through in or about October 2019, he was employed as a quantitative analyst at OppenheimerFunds.

Initially, he served as a senior risk analyst for the firm, which was acquired by Invesco in 2018. He then served as a portfolio manager and director of asset allocation research. Most recently, his role was quant analyst, according to Invesco.

In his role at the firm, he had regular access to information regarding contemplated securities trades on behalf of clients, which included investment companies.

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

The trading scheme was designed to take 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.

“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 in September.

The SEC’s Case

The Securities and Exchange Commission also filed a complaint against Polevikov in U.S. District Court for the Southern District of New York over the same scheme, on Sept. 23.

The time for Polevikov and relief defendant Maryna Arystava, his wife, to answer, move or otherwise respond to the SEC complaint was extended from Dec. 20, 2021, to Feb. 18, 2022, a Dec. 9 court document shows.

(Photo: Adobe Stock)

Jeff Berman

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