Trader Scoffs at Funds! Steals $6K Profits on $1.4M Trades!

SEC v. Mayur Baviskar — U.S. Securities and Exchange Commission Litigation Release No. 26618, dated August 26, 2026.

The SEC charged Mayur Baviskar, a North Carolina trader, with a fraudulent "free-riding" scheme. He allegedly exploited broker-dealers' instant credit policies by initiating trades with unfunded deposits or placing stop-payment orders on valid ones, withdrawing $6,078.16 in profits. Baviskar settled the charges, agreeing to an injunction and to pay disgorgement, prejudgment interest, and a civil penalty.

In Plain English

Imagine you want to buy something online, but you don't have the money in your account yet. You place the order anyway, hoping the money will arrive before the payment is due. Mayur Baviskar did something similar with stock trades. He'd tell his stockbroker he was sending money, and the broker would let him trade stocks right away. But Baviskar either didn't actually send the money, or he'd cancel the payment after he'd already made trades and taken out profits. The SEC said this is like stealing because he got money he wasn't entitled to.

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. Initiating Trades with Unfunded Deposits Between March 2019 and September 2024, Mayur Baviskar began initiating trades by telling his brokerage accounts he was depositing funds. He initiated $377,200 in transfers that he knew lacked sufficient funds in his bank accounts to cover them.
2. Exploiting Instant Credit Brokerage firms often extend 'instant credit,' allowing customers to trade immediately after initiating a deposit, pending the funds clearing. Baviskar exploited this by initiating these unfunded deposits, receiving immediate trading power.
3. Withdrawing Profits Using the instant credit, Baviskar purchased and sold over $1.4 million in securities. He then withdrew trading profits totaling $6,078.16, effectively cashing out before the initial, unfunded deposits were discovered as invalid.
4. Canceling Valid Payments In addition to using unfunded deposits, Baviskar also initiated transfers from bank accounts that *did* have sufficient funds, only to later place stop-payment orders on these valid transfers, reversing the incoming money after he had already traded.
5. Deception of Broker-Dealers The SEC alleged that the broker-dealers would not have extended instant deposit credit or allowed Baviskar to conduct trades if they had known his bank transfers would be reversed or were initiated without sufficient funds.
6. Scheme Discovery Ultimately, the broker-dealers rejected the unfunded deposits or processed the stop-payment orders, leading to the reversal of the funds and the discovery of Baviskar's fraudulent 'free-riding' scheme.

The Enforcement Action

On August 25, 2026, the SEC filed a settled action against Mayur Baviskar, a North Carolina trader, for engaging in a fraudulent "free-riding" scheme. The SEC alleged that Baviskar exploited broker-dealers' instant credit policies by initiating trades with unfunded deposits or by placing stop-payment orders on valid transfers, ultimately withdrawing $6,078.16 in trading profits. Without admitting the allegations, Baviskar consented to a final judgment that would permanently enjoin him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment would also impose a conduct-based injunction and order him to pay disgorgement of $6,078.16, prejudgment interest of $1,914.41, and a civil penalty of $50,000.00.

Named in this action: Mayur Baviskar.

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