SEC accuses traders of fraudulent 'free-rider' scheme
Securities and Exchange Commission (SEC) charges Andrew M.Komarow runs a fraudulent "free-rider" scheme。
The Securities and Exchange Commission (SEC) has issued a complaint to Andrew M of Evan, Connecticut.Komarow files suit。
In its indictment, the SEC accused Komarow of running a fraudulent "free-rider" scheme in an attempt to profit by buying and selling securities without paying fees.。
The complaint alleges that from October 2022 to January 2023, Komarow electronically transferred funds from multiple bank accounts to at least 10 accounts with four brokers, knowing that he did not have enough funds in his bank account to pay for the transfer.。
The indictment also alleges that Komarow immediately began trading securities in brokerage accounts using funds temporarily provided by brokerage firms during fraudulent transfers.。When these transfers are not honoured, the brokerage firm suffers trading losses。
According to the indictment, Komarow's false deposits totaled more than $6.9 million.。Komarow's trade was largely unprofitable: he moved at least $615,031 from his account, but left the brokerage firm with losses totaling more than $3 million, avoiding recouping the losses himself.。
Komarow neither admitted nor denied the charges in the SEC indictment, agreeing to a partial judgment permanently prohibiting him from violating the anti-fraud provisions of Section 10 (b) of the Securities Exchange Act of 1934 and its Rule 10b-5.。
The partial judgment also prohibits Komarow from opening any brokerage account without providing the brokerage company with a copy of the SEC's complaint and final judgment on the matter, and prohibits him from trading any securities if the settlement cash in the account does not meet or exceed the transaction amount。
Part of the decision will see the court decide later whether to order the forfeiture of Komarow's ill-gotten gains, as well as prepaid interest and civil penalties.。The partial judgment also ordered that Komarow be barred from acting as an officer or director of any public company for a period to be decided later by the court.。
Komarow's settlement proposal subject to court approval。
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