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Trader Charged in $3.6M Front-Running Scheme

Sean Wygovsky, a trader at a large Canadian asset management firm, has been charged with securities fraud and wire fraud in connection with his scheme to steal confidential information about the trade orders of his employer and use it to make hundreds of timely, profitable personal securities trades.

According to the complaint, Wygovsky, who was employed at the Employer Firm since approximately 2013, had access to the trade information and trade orders of the Employer Firm. He used this information to make over 700 timely transactions that netted him more than $3.6 million in illegal profits.

To conceal the scheme, Wygovsky allegedly made his front-running trades through brokerage accounts of certain of his relatives. The relatives maintained brokerage accounts for the personal purchase and sale of securities, and Wygovsky caused the accounts to buy or sell the same securities the Employer Firm was planning to trade.

Manhattan U.S. Attorney Audrey Strauss said, "As alleged, Sean Wygovsky illegally exploited his access to his employer firm’s yet-to-be-executed trade orders to make numerous trades in anticipation of the bump or dip the firm’s buying or selling would cause. To conceal the scheme, Wygovsky allegedly made his front-running trades through brokerage accounts of certain of his relatives."

FBI Assistant Director William F. Sweeney Jr. added, "Over the course of several years, as alleged, Wygovsky made hundreds of short-term trades based on inside information that ultimately reaped more than $3 million in profits. Schemes like the one alleged here grossly affect the integrity of our financial markets and remain a top priority for our financial fraud investigative teams."

Wygovsky was arrested this morning in Austin, Texas, and is expected to be presented in federal court this afternoon before a U.S. Magistrate Judge for the Western District of Texas.

The Employer Firm is an asset management firm based in Toronto, Canada, with at least approximately $19 billion in assets under management.

The size of the Employer Firm’s trade orders often caused slight, temporary movements in the price of the securities traded, and Wygovsky used this information to make profitable trades in advance of the firm’s trades.