23-Year-Old Investor’s Free Riding Scheme
The alleged scheme revolves around what federal securities regulators are calling a “free-riding scheme.”
According to a published article, the 23-year-old investor managed to secure a brokerage account by claiming an annual income ranging from $25,000 to $50,000. However, the reality was far from this, as he reportedly earned just about $400 a month from his part-time job at Auntie Anne’s and other similar gigs.
The 23-year-old investor utilized $1 million in pending deposits to purchase approximately $200,000 worth of meme stocks. He didn’t actually possess the money he was using for these trades.
23-year-old investor Anthony’s stock selections included some of the most talked-about names in the market, such as Apple, Tesla, GameStop, AMC Entertainment, and even a cybersecurity-focused exchange-traded fund (ETF) with the ticker symbol HACK.
23-year-old investor Anthony’s broker didn’t suffer any financial losses from these deceptive trades and he managed to make a profit of over $7,000 using fictitious funds.
23-Year-Old Investor Faces Charges
The US Securities and Exchange Commission (SEC) outlined in its complaint that the 23-year-old investor took advantage of his brokerage’s $200,000 “immediate access” credit by initiating $1 million in bank transfers. However, Anthony’s account balance was a mere $0.09 at the time of these transactions.
The broker overseeing his account only discovered the income misrepresentation after the meme stock purchases had already been made. When questioned about his actions, the 23-year-old investor claimed that it was all “a joke” and that he “never really thought of it as fraud.”
However, the 23-year-old investor’s financial escapade won’t go unpunished. While he didn’t admit to wrongdoing, he agreed to a government order that forbids him from engaging in securities trading in the future. Additionally, he will have to pay an undisclosed civil fine, pending approval by a federal judge in North Carolina.