SEC stops options trader who left broker with losses – SEC MEASURES

In many of the Commission’s enforcement actions, the losses from the fraudulent system are borne by the unsuspecting and inexperienced investor caught in a series of false statements – the typical fraud action. Seldom is the person with big loss of broker. Not so with the agency’s latest enforcement lawsuit. There the losses from an ineffective trading system went to the broker. SEC v Batra, Civil Claim No. 2: 21-cv-00434 (C. D. Cal., Filed January 15, 2021).

The Defendant Abhi Batra is a Los Angeles based trader. While he apparently acted frequently, he was often unsuccessful. The trading program he implemented over a four-year period from 2016 generally suffered losses. He had profits, however; The brokers took the losses.

Initially, Mr. Batra acted on his behalf through seven brokerage accounts. After the accounts were set up, he arranged for funding by transferring cash from his bank account through Automated Clearing House or ACH transfers. Usually he would trade options. If the trade lost money, it would cause his bank to withdraw funds from being sent to the broker by falsely claiming it was unauthorized. This left the brokerage firm with the loss on the trade.

For example, in February 2018, Defendant transferred $ 55,000 to Broker A. Mr. Batra then bought options on two different stocks. The trades were not profitable. The defendant then called his bank and falsely claimed that the ACH transfer had not been approved. When the transfer was withdrawn, the broker had losses of $ 54,000.

Mr. Batra used the same technique in some cases even when the trade was profitable. For example, Mr. Batra bought options on another stock from Broker B. The account was funded with another ACH transfer of cash. The trade was profitable. The defendant then withdrew the profits. He later also withdrew the ACH broadcast, again claiming it was fraudulent and unauthorized.

Using the approach outlined in the two examples above, Mr Batra bought $ 44 million in securities through 44 accounts with 14 different brokers between 2016 and early 2020.

When the brokers understood the scheme used by Mr. Batra – known as « freeriding » – the defendant changed his approach. By March 2018, he had switched to nominee accounts for his program that were not in his name. In less than two years he opened 32 more accounts. Approximately $ 900,000 USD was deposited into the accounts via ACH transfers. As a result, the transmissions were withdrawn due to false information provided by the defendant.

During the four year period, brokers suffered losses of $ 665,000 from defendant’s freeride program. The complaint alleges violations of Section 10 (b) of the Stock Exchange Act. The case is pending. See Ref. Rel. No. 25012 (January 19, 2021).

How do I file a complaint with the SEC?

How do I file a complaint with the SEC?

To ask a question or report a problem relating to your investments, your investment account, or a financial professional, contact us online or call the SEC’s toll-free investor support number at (800) 732-0330 (outside the US at 1-202 -551-6551). Visit Investor.gov, the SEC’s website for individual investors.

What if SEC investigates?

All SEC investigations are conducted privately. Investigators seek to obtain facts and evidence, first through informal investigations, then through reviewing brokerage records and reviewing trade data, and then delivering subpoenas for documents and ultimately through testimony.

How long does an SEC investigation take?

The duration of an SEC investigation depends on its subject matter and scope. The average SEC investigation takes anywhere from six months to a year. Sometimes, however, SEC investigations can take several years and place a huge drain on the resources of the investigated party.

What is an SEC violation?

What is an SEC violation?

Common violations that could lead to SEC investigations include: Misrepresentation or omission of important information about securities. Manipulation of the market prices of securities. Steal customer money or securities. Breach of broker-dealer responsibility to treat customers fairly.

Can the SEC bring criminal charges against you for insider trading?

While the SEC may initiate civil legal remedies against a person investigating them for suspected illegal insider trading, only the US Department of Justice can prosecute you for suspected criminal violations of US securities laws.

What laws does the SEC enforce?

The SEC has primary responsibility for enforcing federal securities laws, proposing securities rules, and regulating the securities industry, national stock and options exchanges, and other activities and organizations, including the US electronic securities markets.

What are SEC Enforcement Actions?

In a civil action filed in a United States District Court, the Commission can obtain a court order convicting an individual of further violations of securities laws, expropriation of funds derived from illegal conduct, and, in certain circumstances, civil penalties.

How can I look up SEC filings?

How can I look up SEC filings?

Search SEC Documents To search SEC.gov and Investor.gov for public statements, proposed and final rules, enforcement actions, training materials, and other documents, enter keywords or phrases below.

What is the SEC Edgar Database?

What is EDGAR? EDGAR, the electronic data collection, analysis, and retrieval system, is the primary system for corporations and others to process documents under the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, and the Investment Company Act of 1939 submit 1940.

How do you check if a company is SEC regulated?

Visit the SEC capital market participant registration system at www.cmprs.sec.gov.ph to review and further verify the SEC secondary registration or license online.

Are SEC filings public information?

The Securities and Exchange Commission (SEC) keeps public and private records. … We will post non-public recordings unless the recording is protected by one of nine FOIA exemptions.

SEC stops options trader who left broker with losses – SEC MEASURES
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