Securities Regulation Daily Wrap Up, ENFORCEMENT—E.D.N.C.: Free-riding trader's ride is over, (Aug 26, 2026)
Organizations Mentioned:Wong Keith Yat Chor
The free-riding trader exploited instant credit to buy and sell more than $1.4 million in securities using transfers he knew would not clear.
A trader who sold over $1.4 million in securities without having funds to pay for the trades has settled with the SEC. The complaint charged Mayur Baviskar with "free-riding," or exploiting instant credit extended by broker-dealers while lacking sufficient funds to cover his trades. To settle the charges, Baviskar consented to a final judgment which, if approved, would enjoin him from future violations plus a conduct-based injunction, and which would order him to pay a total of $57,992.57 in disgorgement, interest, and penalties (SEC v. Baviskar, No. 5:26-CV-00600 (E.D.N.C. filed Aug. 25, 2026)).
Free-riding. Defendant Mayur Baviskar is a resident of North Carolina and worked as an engineer for various technology companies. According to the complaint, between March 2019 and September 2024, Baviskar used existing or newly opened brokerage accounts to exploit programs giving customers immediate access to funds upon the initiation of a bank transfer to the account. Almost every time, Baviskar's bank account did not have sufficient funds to cover his transfers—if they did, he later stopped payment on the transfers.
During this time, Baviskar initiated $377,200 in unfunded deposits into brokerage accounts at nine broker-dealers. Baviskar was then able to purchase and sell securities totaling $1,442,249.45 while withdrawing $6,078.16 in profits. The complaint notes that the broker-dealers would not have extended instant deposit credit to Baviskar or allowed him to conduct trades in the accounts if they knew that his bank transfers would be reversed. Baviskar was able to trade until his transfers were reversed by the banks (or when he placed stop payment orders) or the broker-dealers discovered what he did and closed his accounts.
At least two broker-dealers notified Baviskar that he was engaged in fraud, yet, the Commission says, he continued with his free-riding violations. For example, in October 2019, a broker-dealer filed a FINRA arbitration proceeding against Baviskar related to free-riding violations in his account.
Settled. The Commission charged Baviskar with violating the antifraud provisions of the Exchange Act and sought injunctive relief, disgorgement, and penalties. Without admitting or denying the allegations, Baviskar consented to the entry of a final judgment, subject to court approval, under which he would be permanently enjoined from future violations of the antifraud provisions and from opening a brokerage account without providing that firm with a copy of the complaint and judgment in this matter. He would also be ordered to pay disgorgement of $6,078.16, prejudgment interest of $1,914.41, and a $50,000 civil penalty.
The case is No. 5:26-CV-00600.
Attorneys: Robert F. Schroeder for the SEC.
LitigationEnforcement: BrokerDealers Enforcement FraudManipulation GCNNews