The Securities and Exchange Commission (SEC) has charged Eduardo Hernandez, Christopher Flagg, Daquan Lloyd, and Corey Ortiz, all currently or formerly of Long Island, New York, with fraud for perpetrating a multi-year “free-riding” scheme that generated more than $2 million in illicit profits.
The SEC alleged that, from approximately November 2018 through January 2022, the defendants perpetrated a free-riding scheme, which is when a brokerage customer buys and sells securities without having the funds to pay for the trading.
According to the complaint, the defendants opened and used unfunded brokerage accounts or loser accounts, to generate trading profits by engaging in matched trading with winner brokerage accounts that they also controlled.
The complaint alleged that the defendants maintained the loser accounts at a broker that…
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