Stealing money

A former trader for U.S. pension giant TIAA-CREF has been sentenced to jail for engaging in a front-running scheme.

U.S. district judge Paul Gardephe sentenced Lawrence Billimek to 70 months in prison after he pled guilty to one count of securities fraud in connection with an insider-trading scheme in which he had advance knowledge of the pension fund’s trading plans.

The scheme exploited the fact that trades by TIAA-CREF — which had US$1.3 trillion in assets under management as the end of 2023 — would often move the market in the securities it was trading.

Using insider knowledge of some of the pension giant’s planned trades, Billimek tipped off a co-conspirator, Alan Williams, enabling them to trade ahead of TIAA-CREF and split the illicit profits this trading generated.

According to the U.S. Securities and Exchange Commission (SEC), which filed a parallel civil action in the case, the pair engaged in more than a thousand of these front-running trades between 2016 and the end of 2022, racking up at least US$47 million in illegal profits.

“The SEC staff analyzed trading using the Consolidated Audit Trail (CAT) database to uncover Williams’ allegedly fraudulent trading and to identify how he profited by repeatedly front-running large trades by Billimek’s employer,” the regulator noted in a release.

U.S. authorities also alleged that the pair used burner phones to hide their communications and reportedly lied to financial institutions about the source of their trading profits.

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

“Billimek thought that hiding his conduct behind burner phones and lies would shield him from detection from law enforcement. He was mistaken,” Williams said. “Prosecuting white collar crimes like this sends a clear message that no one, regardless of their position, privilege, or the type of crime they commit, is outside the reach of the law.”

Along with jail time, Billimek was also sentenced to three years of supervised release and ordered to pay US$12.25 million in forfeiture.

Williams also previously pled guilty for his role in the scheme. His sentencing has not yet been scheduled.

The SEC’s civil case was stayed, pending the outcome of the criminal proceeding.