MAN BUYS $900K IN STOCKS WITH EMPTY ACCOUNTS! Exploits 'Instant Credit'!

SEC v. Aaron O’Brian Freeman — U.S. Securities and Exchange Commission Litigation Release No. 26407, dated September 22, 2025.

The SEC charged Aaron O’Brian Freeman of North Carolina with a "free-riding" scheme. He allegedly deposited nearly $3.5 million in fraudulent checks into brokerage accounts and used the immediate credit to buy securities totaling over $889,000 before the checks bounced. The scheme resulted in a net loss of over $5,400 for the broker-dealers involved.

In Plain English

Imagine you want to buy a new video game, but you don't have enough money in your bank account. You write a check for the game, hoping the store will let you take the game right away before they realize your check won't clear. Aaron Freeman allegedly did something similar with stocks. He sent bad checks to investment companies to buy stocks, hoping to sell them for a profit before the companies discovered the checks were fake. The companies eventually caught on, and while they stopped him, they lost a small amount of money.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Open Brokerage Accounts Between January and February 2024, Aaron O’Brian Freeman opened multiple brokerage accounts. He also opened accounts in the names of two relatives, including his disabled aunt, to conduct his scheme.
2. Initiate Fraudulent Deposits Freeman deposited checks into these brokerage accounts, totaling nearly $3.5 million. He knew these checks were drawn from accounts that were either closed or lacked sufficient funds to cover the amounts.
3. Exploit Immediate Credit Freeman took advantage of the "immediate access" or "instant deposit" credit offered by broker-dealers. This allowed him to trade securities using the deposited funds before the broker-dealers verified the legitimacy of the checks.
4. Purchase Securities Using the falsely extended credit, Freeman purchased securities totaling $889,087.04. He aimed to profit from these trades before the fraudulent nature of the deposits was discovered.
5. Attempt to Withdraw Funds In addition to securities purchases, Freeman also spent approximately $4,000 using a debit card linked to one of the brokerage accounts, attempting to withdraw funds before the scheme unraveled.
6. Discovery and Account Freeze Each broker-dealer involved eventually discovered that the deposits were fraudulent. They responded by freezing Freeman's access to the accounts.
7. Reversal of Transactions The broker-dealers reversed the fraudulent deposits and liquidated the securities positions that Freeman had purchased with the unfunded money.
8. Net Loss Incurred Despite reversing the transactions, the broker-dealers suffered a total net loss of at least $5,463.26 due to Freeman's free-riding scheme.

The Enforcement Action

The SEC charged Aaron O’Brian Freeman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and a civil money penalty.

Named in this action: Aaron O’Brian Freeman.

Original SEC litigation release ↗ · Browse all cases