A trader at a $1.1-trillion-AUM (as of June 30) fund firm has been arrested and charged for his alleged involvement in a six-year front-running scheme that, according to prosecutors, generated more than $47.3 million in profits.
Yesterday, Damian Williams
, the U.S. attorney for the Southern District of New York, and Michael Driscoll
, the assistant director in charge of the FBI's New York field office, unveiled
conspiracy, securities fraud, and wire fraud charges against Lawrence Billimek
and Alan Williams
(and confirmed that Williams and Billimek were arrested yesterday). In a parallel action, Joseph Sanson
, chief of the market abuse unit in the enforcement division of the U.S. Securities and Exchange Commission (SEC
civil charges against Billimek and Williams, accusing the duo of violating antifraud provisions of federal securities laws.
Williams is a retired trader, according to prosecutors, while Billimek is an equity trader at TIAA's Nuveen
. In a 16-page DoJ indictment
and a 19-page SEC complaint
, the prosecutors claim that, from 2016 to 2022, Williams used tips from Billimek to place more than 1,000 "timely, profitable" stock trades based on Billimek's employer making big trades in the same stocks. Billimek allegedly used a pair of burner phones to keep Williams in the loop, and Williams in turn paid Billimek roughly $10 million (at least), according to the DoJ.
"We learned yesterday that one of our employees has been charged with tipping an outsider about our planned trading activities by misappropriating confidential informtion in direct violation of our policies," a Nuveen spokesperson tells MFWire
via an emailed statement. "We immediately placed the employee on leave, suspended his access to all company networks and trading platforms and began our own review, and we are cooperating fully with authorities."
On the SEC side, Terry Miller
of the SEC's Denver regional office will lead the litigation. For the DoJ, assistant U.S. attorneys Jason Richman
and Daniel Tracer
are leading the prosecution.
"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 profit," Sansone state. "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."
"Billimek and Williams tried to cover their tracks by using burner phones and secret payments, but their scheme has now been laid bare," Williams states.
"As alleged, the defendants engaged in a years-long scheme in which Mr. Billimek obtained information regarding his employer's intent to make relatively large trades in certain stocks," Driscoll states. "In turn, this allowed Mr. Williams to trade in the same stocks in advance and realize substantial ill-gotten profits."
The DoJ charges carry a maximum sentence of 45 years in prison. On the SEC side, the regulator is seeking disgorgement, plus interest and penalties.
Per Billimek's LinkedIn profile, he joined TIAA in 2012 after working with Avalon Advisors, Invesco, and Nicholas Applegate.
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