Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that LAWRENCE BILLIMEK, a trader at a major financial services organization (the “Employer’), and ALAN WILLIAMS, a retired financial professional and active day-trader, were charged in an indictment in Manhattan federal court with securities fraud and wire fraud in connection with an extensive insider trading scheme, in which they stole confidential information about the trade orders of the Employer in order to conduct over a thousand timely, profitable securities trades in the same stocks as the Employer. BILLIMEK attempted to hide his conduct by using prepaid, unregistered “burner” phones, and WILLIAMS sent millions of dollars back to BILLIMEK for sharing the confidential information. BILLIMEK was arrested today in the Western District of Texas and WILLIAMS was arrested in the District of Oregon.
U.S. Attorney Damian Williams said: “By stealing confidential trade information from a major financial services organization, Lawrence Billimek betrayed the trust and confidence of his employer and schemed with Alan Williams to make tens of millions of dollars of illegal profit. Billimek and Williams tried to cover their tracks by using burner phones and secret payments, but their scheme has now been laid bare.”
FBI Assistant Director in Charge Michael J. Driscoll said: “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. In turn, this allowed Mr. Williams to trade in the same stocks in advance and realize substantial ill-gotten profits. These types of insider-trading schemes satisfy the greedy ambitions of nefarious actors at the expense of average investors. The FBI remains steadfast in our efforts to ensure our financial markets are a level playing field for all by bringing to justice those who would seek to illegally exploit them.”
As alleged in the Indictment unsealed today in Manhattan federal court:[1]
LAWRENCE BILLIMEK has been employed at the Employer since approximately 2012. The Employer is a major financial services organization that provides asset management services with over $200 billion in assets. ALAN WILLIAMS spent years working as a trader in the financial services industry. WILLIAMS is currently retired but is an active day-trader.
The Front Running Scheme
Based on his position as a trader at the Employer, BILLIMEK had access to the trade information and trade orders of the Employer. Like most large asset managers, the Employer had rules and regulations concerning employees’ personal trading, including requirements about the confidentiality of client information and prohibitions against insider trading and personal trading in the same securities as the Employer. Because of the size of the Employer’s trade orders, trades by the Employer often caused temporary movements in the price of the securities they traded. For example, if the Employer engaged in a large purchase of stock, the increased demand could cause a rise in the stock price, and if the Employer engaged in a large sale of stock, the increased supply could cause a drop in the stock price. Because BILLIMEK had access to the Employer’s trade orders, he knew in advance when a particular stock price would move up or down based on that trading.
WILLIAMS was an active day trader through at least two retail brokerage accounts. From at least 2016 through 2022, after obtaining information about the Employer’s upcoming trading activity from BILLIMEK, WILLIAMS bought or sold the same securities that the Employer would be buying or selling in order to profit through the subsequent movement of the stock that would occur along with the Employer’s trading. WILLIAMS would then exit those positions once the Employer’s trading was underway or complete, often within minutes. For example, if WILLIAMS learned from BILLIMEK that the Employer would be buying a particular stock, WILLIAMS purchased that stock beforehand. Then, as the Employer made relatively large purchases, the stock price would increase and WILLIAMS would sell those same stock, on the same day, at a profit.
BILLIMEK and WILLIAMS engaged in these front-running trades on at least over a thousand occasions between 2016 and 2022. In order to hide their communication throughout the scheme, BILLIMEK used prepaid, unregistered “burner” phones to provide confidential information as well as trading instructions to WILLIAMS. In total, WILLIAMS’ trading based on the confidential trade information from BILLIMEK generated tens of millions of dollars in profits, and WILLIAMS shared millions of dollars of those profits with BILLIMEK through checks and wire transfers. At times, BILLIMEK also provided false and misleading information to financial institutions about the purpose and nature of those transfers, including referring to them as gifts.
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LAWRENCE BILLIMEK, 51, of Hailey, Idaho, and ALAN WILLIAMS, 77, of West Linn, Oregon, are each charged with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and one count of wire fraud, which carry a total maximum sentence of 45 years in prison.
The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the work of the FBI. Mr. Williams further thanked the Office of United States Securities and Exchange Commission for their cooperation and assistance in this investigation.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jason Richman and Daniel Tracer are in charge of the prosecution.
The allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.