Brian T. Daly Quoted in Hedge Fund Law Report on the Implications of the Actions of SEC and DOJ Investigation
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Hedge Fund Law Report has quoted Akin Gump investment management partner Brian T. Daly, in the article “Jail, $8.5‑Million Forfeiture and Industry Bar for Securities Analyst in Front‑Running Scheme.”
The article discusses the Securities and Exchange Commission (SEC) enforcement action and parallel criminal complaint against securities analyst Sergei Polevikov and details the terms of the civil and criminal resolutions.
Daly, whose practice focuses on advising hedge, private equity and real estate fund managers on regulatory, compliance and operational matters remarked, “there is a clear, coordinated criminal and civil message being sent…we have 33 months of prison, $8.5 million of forfeiture and a fine on the criminal side, plus a cease and desist and industry bar on the civil side. This is no slap on the wrist when compared with numerous insider trading cases that settle for less.”
On the implications of the resolutions Daly stated, “both the SEC and the CFTC bring front-running cases based on misused or misappropriated employer information under 10b‑5, which is the basis for insider trading liability, but there is a still a perception that those cases are not ‘insider trading.’”
According to the article, there is still no indication that the SEC has taken any enforcement action against the advisers. In the article Daly shared, “it is unfortunate that the SEC press release described Polevikov as a ‘Quant Who Perpetrated [a] Front-Running Scheme,’ when there was no ‘quant’ aspect to [his actual crime],” he adds, “by all accounts, this appears to be a rogue employee who misused information he could view on the order book – and is not an error, omission or wrongful act effected through a quantitative or systematic strategy.”
To read the full article, click here.
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