A former equity trader at a large U.S. asset manager has been charged with allegedly engaging in a front-running scheme that involved tipping off a retired trader to the firm’s trading plans, in a scheme that generated US$47 million in illicit profits.
The U.S. Securities and Exchange Commission (SEC) filed fraud charges against equity trader Lawrence Billimek and a retired industry veteran and active day trader, Alan Williams, alleging that they engaged in a front-running scheme that ran from 2016 to 2022.
The SEC alleged that Billimek would tell Williams of his firm’s forthcoming market-moving trades, and that Williams would then trade ahead of the firm’s large orders, profiting on the market moves that inevitably occurred when those orders were executed.
In a parallel action, the U.S. attorney’s office for the Southern District of New York filed criminal charges, alleging securities fraud, wire fraud and conspiracy, against Billimek and Williams.
According to the indictment, Billimek used burner phones to send tips to Williams in an effort to hide the scheme, which produced over 1,000 front-running trades between 2016 and 2022, generating millions in profits that the men shared.
The allegations have not been proven.
The SEC said the alleged illicit trading was uncovered by its analysis of consolidated audit trail data, which revealed that Williams repeatedly profited by trading ahead of the market-moving trades.
“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,” said Joseph Sansone, chief of the SEC enforcement division’s market abuse unit, in a release.
“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,” he said.