Ex-Nuveen Stock Trader Gets 70 Months for Insider-Trading Scheme

What You Need to Know

He tipped off an Oregon retiree about the firm's planned trades in stocks in a six-year plot involving over 1,000 trades.
The retiree sent Billimek a share of the profits through checks and wire transfers totaling about $12 million.
The scheme was one of the first uncovered by the Consolidated Audit Trail, a database of trading information launched by the SEC in the wake of the 2010 Flash Crash.

A former Nuveen equity trader was ordered to spend almost six years behind bars after admitting he tipped off another man to the firm’s trades as part of a $47 million front-running scheme.

U.S. District Judge Paul Gardephe sentenced Lawrence Billimek on Monday to 70 months in federal prison, matching the minimum punishment requested by prosecutors. Billimek, 53, pleaded guilty to one count of securities fraud as part of an agreement with prosecutors.

Gardephe said Billimek, a career equities trader, was well aware that leaking sensitive information to generate millions in profits was “blatantly and flagrantly illegal.”

Billimek’s conduct was “the product of literally hundreds of bad decisions made over a period of six years or more,” the judge said.

Half a dozen friends and family were in court to support Billimek, who didn’t react to the sentence but hugged one of his supporters after the judge left the room. Billimek must report to prison in August.

The judge recommended that the Bureau of Prisons place the father-of-three in a facility in Florida.

Billimek told the judge Monday he was deeply remorseful for breaking the law and his own moral code.

“This case has been a total reset for me,” the former trader said at the hearing. “I finally found the courage I need to step up and change.”

Pre-Trade Tips

Billimek admitted to tipping off an Oregon retiree, Alan Williams, about Nuveen’s planned trades in stocks, including Lululemon Athletica Inc. and Ulta Beauty Inc., as part of a complex six-year plot that involved more than 1,000 trades and the use of burner phones to hide their interactions from authorities.

The scheme was one of the first uncovered by the Consolidated Audit Trail, a new database of trading information launched by the Securities and Exchange Commission in the wake of the 2010 Flash Crash. It was designed to help diagnose the sources of market turmoil and uncover potential manipulation.

The plot by Billimek and Williams also was notable for the size of their alleged gains. Many of recent insider-trading cases have involved six-figure profits that revolved around just a handful of trades.

“Lawrence Billimek shamelessly abused his position, orchestrating an insider trading scheme that pocketed tens of millions in illicit gains,” U.S. Attorney for the Southern District of New York Damian Williams said.

Billimek’s job at Nuveen, a unit of TIAA-CREF, gave him access to confidential information because he had responsibility for routing orders based on trading decisions made by the firm’s portfolio managers to broker-dealers. He’d worked at the firm since 2012.

Wire Transfers

Prosecutors said Williams, a former head trader at another large financial institution, used Billimek’s tips to place orders through least two retail brokerage accounts that matched those planned by Nuveen. He’d then exit his positions once Nuveen started trading, which usually moved prices.

Williams sent Billimek his share of the profit through checks and wire transfers totaling about $12 million, and sometimes disguised the payments as gifts, the government said.

‘Thousands’ of Trades

Prosecutor Jason Richman pushed back against the characterization of a defendant who was just trying to make ends meet. Billimek “purchased multiple homes, some multimillion dollar homes,” all across the country, Richman said.

“This was not one year, this was not two years,” Richman said. “This was not one trade. This was thousands of occasions over the course of six years in which the defendant engaged in this.”

The government argued for at least a 70-month sentence to deter others from similar conduct. They also said that, while Billimek has no history of criminal activity, he needs to be incarcerated to stop him from returning to crime — noting that he has tens of thousands of dollars in monthly expenses and continues to day-trade from his home in New Orleans.

TIAA-CREF is seeking more than $38 million in compensation from Billimek, who argued that he shouldn’t have to pay restitution because of his diminished job prospects and lack of future earnings.

Billimek said much of his income and expenses come from the rental of some of the properties that are subject to forfeiture or sales of cryptocurrency investments. He said his expenses are likely to decrease when the properties are sold.

The case is U.S. v Billimek, 22-cr-675, U.S. District Court, Southern District of New York (Manhattan).