The Securities and Exchange Commission (SEC) charged 25-year-old Tyrone Johnny Lacy, Jr. (“Lacy”) of Sefner, Florida that he conducted a fraudulent “free-riding” scheme in which he took advantage of credits offered to him by certain broker-dealers to purchase securities in excess of $300,000 without having the funds to pay them.
The SEC’s complaint alleges that, from at least October 1, 2022, to October 26, 2022, Lacy used a falsified brokerage application and false deposits from bank accounts with minimal funds to induce two broker-dealers to provide “instant purchasing power” credit Lacy for the securities purchase.
According to the complaint, before Lacy’s fraudulent deposits were reversed due to insufficient funds in his bank accounts, he used credit extended to him by the broker-dealers to purchase approximately $331,700 in securities. Lacy allegedly withdrew about $1,600 in trading profits and left a broker-dealer with a loss of about $1,500.
The SEC’s complaint, filed in the United States District Court for the Middle District of Florida, accuses Lacy of violating the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 based on this.
The SEC is seeking permanent injunctive relief, a conduct-based injunction and civil penalties against Lacy, as well as disgorgement of ill-gotten gains plus prejudgment interest.