SEC Charges North Carolina Man in Fraudulent "Free-Riding" Scheme

WASHINGTON, Sept. 23 -- The Securities and Exchange Commission issued the following litigation release (No. 7:25-cv-01514-BO; E.D.N.C. filed September 19, 2025) involving Aaron O'Brian Freeman:

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The Securities and Exchange Commission on September 19, 2025, charged 31-year-old Aaron O'Brian Freeman ("Freeman"), of Lake Waccamaw, North Carolina, with conducting a fraudulent "free-riding" scheme in which he bought nearly $900,000 worth of securities without paying for them.

The SEC's complaint alleges that, between at least January 2024 and February 2024, Freeman deposited checks into brokerage accounts from other accounts he knew were closed or lacked sufficient funds, and then sought to immediately trade on or withdraw funds from the brokerage accounts before the recipient broker-dealers discovered that the deposits were fraudulent. Specifically, the complaint states that Freeman initiated nearly $3.5 million in unfunded check deposits, made securities purchases totaling $889,087.04 using the immediate credit extended by the broker-dealers, and spent approximately $4,000 in debit card payments on a debit card received from one of the recipient broker-dealers. Each broker-dealer ultimately discovered the scheme, froze Freeman's access to the accounts, reversed the deposits, and liquidated the positions. Nevertheless, the broker-dealers suffered a total net loss of at least $5,463.26. According to the complaint, Freeman's scheme involved not only brokerage accounts in his name, but also accounts that he opened in the names of two relatives, including a disabled aunt.

The SEC's complaint, filed in the United States District Court for the Eastern District of North Carolina, charges Freeman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctive relief, a conduct-based injunction, disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil money penalty.

The SEC's investigation was conducted by Brian M. Basinger and supervised by Stephen E. Donahue and Justin C. Jeffries, all of the Atlanta Regional Office. The litigation will be led by Paul Kim and supervised by M. Graham Loomis.

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Resources

* SEC Complaint (https://www.sec.gov/files/litigation/complaints/2025/comp26407.pdf)

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Original text here: https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26407