The United States Securities and Exchange Commission, SEC, has filed civil charges against Andrew M. Komarow for allegedly engaging in a fraudulent free-riding scheme through which he tried to profit by buying and selling securities that he did not pay for.
The SEC’s lawsuit contends that, from October 2022 to January 2023, Komarow made unfunded electronic transfers of money sourced from different bank accounts to at least ten accounts at various securities broker-dealers, understanding that he did not possess enough funds in the bank to cover these transfers. The SEC complaint further alleges that Komarow immediately commenced securities trading in the brokerage accounts utilizing funds the securities brokerage firms temporarily provided while the fraudulent transfers were pending. When those transfers did not happen, the brokerage firms were stuck with the securities trading losses.
The SEC further alleged in its enforcement action that Komarow made bogus deposits in excess of $6.9 million and that his securities trading was, for the most part, not profitable. Komarow, per the SEC’s suit, withdrew approximately $615,000 from the securities accounts, but saddled the broker-dealers with over $3 million in losses, for which he attempted to avoid financial responsibility.
By consenting to the court’s entry of a partial judgment by neither admitting nor denying the SEC’s allegations, Komarow is permanently enjoined from committing violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, which are anti-fraud provisions. The Court’s partial judgment also bars Komarow from opening any brokerage account without initially providing the securities brokerage firm with a copy of the SEC’s complaint and final judgment, and further restricts him from placing any securities trades without having settled cash in the account equal to or greater than the amount of the securities trades. These are called “conduct-based injunctions” and are increasingly being sought by the SEC in its enforcement cases. Komarow is also prohibited from serving as an officer or director of a public company for a time period to be decided by the court. The monetary relief requested by the SEC in its complaint, in other words, disgorgement, prejudgment interest and a civil penalty, will be subsequently ruled upon by the court.
SEC Investigation Defense Attorney
David Chase, Esq. of the SEC defense Law Firm of David R. Chase is an SEC investigation defense attorney and represents nationwide individuals and companies that have received a SEC subpoena in a SEC investigation. You may contact David toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com. The Firm’s website may be visited at: www.securitiesfrauddefense.com.
