Former Connecticut investment advisor indicted for fraud in $3.3M 'free-riding' scheme, feds say

Mar. 3—BRIDGEPORT — A former Connecticut broker and investment advisor has been indicted for defrauding three financial services companies of more than $3.3 million, federal prosecutors said.

Andrew M. Komarow, 36, of Avon, has been charged with 10 counts of wire fraud and one count of securities fraud in connection with the alleged scheme, according to David Sullivan, U.S. attorney for the District of Connecticut.

Sullivan said the indictment was returned by a grand jury in New Haven on Feb. 4 and that Komarow pleaded not guilty during a hearing in Bridgeport federal court Monday. He said Komarow was released on a $50,000 bond.

Sullivan said Komarow is accused of taking advantage of the credit that three financial service companies extended him to transfer money to newly opened brokerage accounts despite having insufficient funds — a practice known as "free-riding."

Komarow initiated about $8.9 million in transfers between October 2022 and February 2023 and used the brokerage accounts to conduct high-risk, short-term options trading in an attempt to cover his insufficient funds, Sullivan said.

The scheme, which exploited the delay in time between the fund transfers and the moment the transaction was cleared by a financial services company, defrauded the three companies of a total of $3,352,407, Sullivan said.

The U.S. Securities and Exchange Commission previously investigated the transactions and barred Komarow from acting as a broker or investment adviser. He has also been banned from associating with firms that sell securities or provide investment advice to the public.

According to the 14-page SEC complaint, Komarow offered an employee a monetary bonus to make the transactions and instructed them through Microsoft Teams to "lie, whatever you have to do, to get those trades placed."

The complaint shows the compliance department at one of the financial companies later asked Komarow to confirm that he knowingly made the trades despite not having the sufficient funds to cover the transaction.

"I don't have the funds," Komarow replied, the complaint shows. "I do not know what I was thinking when this happened."

Sullivan said Komarow faces up to 220 years in prison if convicted of all 11 counts of the indictment.

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