U.S. authorities allege that a former quantitative analyst with a New York-based asset manager carried out a multi-million dollar front-running scheme over five years.

The U.S. Securities and Exchange Commission (SEC) charged Sergei Polevikov, who worked as a quantitative analyst at OppenheimerFunds Inc., alleging that he generated at least US$8.5 million in illicit profits by front-running his firm’s orders.

In a complaint filed in the U.S district court for the Southern District of New York (SDNY), the SEC alleged that between early 2014 and late 2019, Polevikov placed nearly 3,000 trades ahead of his firms’ portfolio managers with knowledge of their trading plans.

The regulator said that the allegedly illicit trading was uncovered by its market abuse unit, which used data analysis to detect suspicious trading patterns “such as improbably successful trading across different securities over time.”

“These capabilities enabled the SEC to spot Polevikov’s trading activities which consistently generated small profits that added up to a total of at least US$8.5 million over the course of the scheme,” the SEC said.

In a parallel action, the U.S. attorney’s office for the SDNY announced related criminal charges of securities fraud, wire fraud and investment company fraud.

The SEC’s complaint seeks disgorgement of ill-gotten gains plus interest, penalties and other relief.

None the allegations have been proven.