S.E.C. using advanced data analytics to detect “front Running” stock purchases

The Securities and Exchange Commission has pressed fraud charges against Sean Wygovsky in connection with a long-running and lucrative front-running scheme, netting more than $3.6 million in illicit gains. According to his LinkedIn Profile, Sygovsky is a Senior Analyst/Trader/Associate in Polar Asset Management Partners in Toronto.

The SEC’s complaint charges Wygovsky was engaged in a fraudulent front-running scheme resulting in at least $3.6 million in trading profits. They seek disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief.

Also known as tailgating, front-running is like a combination of stock manipulation and insider trading. An investor or trader acting on behalf of an investor buys a stock based on confidential information that there is a pending transaction that will greatly influence the price of the stock.

Front-running in the securities markets involves trading ahead of large and
nonpublic orders of other market participants, so as to benefit from the market impact of those
large orders. front running based on insider information is illegal and is considered a common occurrence in today’s trading activities. The SEC is starting to take a closer look at this activity, however.

Trading at a major Canada-based asset management firm, Wygovsky repeatedly traded in his family members’ accounts held at brokerage firms in the United States ahead of large trades that were executed on the same days of his employer’s advisory clients.

Then, typically before the client accounts completed their executions, Wygovsky allegedly closed out the just-established positions in his relatives’ accounts, nearly always at a profit.

The front-running alleged was from approximately January 2015 through at least April 2021 on over 600 occasions, according to the financial watchdog.

Joseph G. Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, said: “As alleged in our complaint, Wygovsky abused his position and his employer’s trust by front-running the very securities transactions that he was tasked with executing for his employer’s advisory clients.

“Thanks to the SEC’s development and use of sophisticated data analytics tools, Wygovsky’s alleged scheme was uncovered and his efforts to evade detection by using family members’ accounts failed.”

JEFFREY NEWMAN REPRESENTS WHISTLEBLOWERS INCLUDING THOSE WITH CLAIMS THAT VIOLATE SECURITIES LAWS. HE CAN BE REACHED AT JNEWMAN@NEWMANSHAPIRO.COM OR BY CALLING 978-880-4758