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SEC Bars Financial Advisor for Securities Trading Scheme

Posted on May 10th, 2024 at 1:33 PM
SEC Bars Financial Advisor for Securities Trading Scheme

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï

The Securities and Exchange Commission (SEC) has barred financial advisor Andrew Komarow from the securities industry, following a similar bar by FINRA. Komarow accepted the SEC settlement without admitting to or denying the SEC's findings.

According to InvestmentNews, Komarow is known for his Connecticut-based practice focusing on special needs and autism. He was found to have been involved in a "free-riding" securities trading scheme from October 2022 to January 2023, according to the SEC settlement.

"Free-riding" involves traders exploiting the "immediate access" credit provided by certain broker-dealers before cash deposits from bank accounts are received. The SEC discovered that Komarow initiated "unfunded automated clearing house transfers of money totaling $6.9 million from multiple bank accounts to accounts at broker-dealers and engaged in speculative trading with the resulting credits before the transfers were canceled for insufficient funds."

Although Komarow's trading activities did not yield significant profits at each broker-dealer, he withdrew funds from two accounts where he had engaged in free-riding. As per the SEC's findings, this led to losses exceeding $3 million for the broker-dealers, while Komarow personally profited at least $615,031.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

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