A former trader and portfolio manager with Toronto’s Polar Asset Management Inc. who pled guilty to insider trading last year has now also admitted to participating in a second insider trading scheme involving information obtained from his firm.
The U.S. attorney’s office for New Jersey announced that Sean Wygovsky pled guilty to one count of securities fraud in U.S. district court in connection with an insider trading scheme involving pending merger deals. He is scheduled to be sentenced on Sept. 27.
According to the charging information, Wygovsky used information that he acquired at his firm about planned merger transactions involving special purpose acquisition companies (SPACs) to tip off a friend who worked at a New Jersey-based brokerage firm about the upcoming deals.
When the firm was invited to participate in specific SPAC acquisitions, it placed those companies on an internal restricted list and warned employees not to trade in those SPACs. Yet, it’s alleged that Wygovsky repeatedly tipped off his friend and broker, Christopher Matthaei, who then traded on that inside information, generating US$3.4 million in illicit profits.
Matthaei was arrested and charged earlier this year. The allegations against him have not been proven.
“The goal of the scheme was for Wygovsky and Matthaei to enrich themselves through Matthaei’s trading in SPAC securities based on [inside information] about SPAC mergers and acquisitions that Wygovsky learned about through his work at the asset management company and improperly disclosed to Matthaei,” the charges alleged.
“This defendant admitted using nonpublic information from his job at an asset management firm to further a multimillion-dollar insider trading scheme,” U.S. attorney Philip Sellinger said in a release.
Last year, Wygovsky pled guilty to securities fraud in connection with a separate scheme that involved front running trades made by his firm.
In both cases, Wygovsky also settled related charges with the U.S. Securities and Exchange Commission (SEC).