- The SEC says a fast-food employee obtained a $200,000 advance loan by making fraudulent deposits.
- Auntie Anne’s employee deposited the entire amount in Tesla, Nvidia, GameStop, AMC and other stocks.
- His broker caught on and liquidated the holdings a day later, making a profit of nearly $7,000.
According to the Securities and Exchange Commission, a fast-food employee defrauded his online broker into giving him a $200,000 advance credit, then wrongfully invested the money in stocks including Tesla, Nvidia, GameStop and AMC Entertainment.
Deonte Jahtori Anthony, 23, was a part-time employee at an Auntie Anne’s in North Carolina last summer. On July 1, he applied for a self-directed brokerage account, claiming he would earn between $25,000 and $50,000 a year, the SEC said in a complaint filed on August 25 and seen by Insider. while he was earning only $400 a month.
Anthony linked his trading account to a bank account with only 9 cents, then began making non-fund deposits totaling $1 million between July 5 and 6. The pending deposit gave him access to $200,000 in instant credit, which he pledged across eight stocks and one exchange. -traded funds on July 6, the SEC said.
The pretzel-shop employee deposited approximately $85,000 at Apple, $78,000 at GameStop, $22,000 at Nvidia, $13,000 at AMC Entertainment, and $700 at Tesla. According to the SEC, he also invested another $800 in Canoe Health, Electronic Arts, Resolute Forest Products and ETFMG Prime Cyber Security.
Gamestop and AMC are both “meme stocks” whose prices skyrocketed in early 2021 as retail investors bought them en masse to punish short sellers and make huge profits in a matter of days. Tesla and Nvidia also have fervent fans who expect the pair to win big from the artificial-intelligence revolution. The intense hype has helped the automaker and the graphics-chip company’s respective stock prices nearly double and triple this year.
The broker learned of Anthony’s alleged fraud the next day, froze his account and liquidated all his holdings. The short-term purchase proved profitable; The broker made a profit of nearly $7,000, which included returns of nearly $4,700 on GameStop, $1,600 on Apple and $800 on Nvidia. The SEC complaint shows that when Anthony’s broker cashed out, all but one of his trades were in the green.
Anthony was unable to withdraw any money before his account was frozen. His deposit was later returned for insufficient funds, and he was evicted from Auntie Anne’s on July 9 after he failed to turn up for work. The regulators said he admitted under oath to deposit the amount and misled his broker during his testimony during the investigation.
The SEC said, “When asked why he made a non-fund deposit of $1 million without the funds to cover the transaction, Anthony dismissed his conduct as a ‘joke’ and Said he ‘never really thought of it as a hoax’.
Anthony tried to execute a “free-riding” scheme, where a trader makes fraudulent deposits to access advanced credit, then uses that credit to make money and withdraw before their broker catches up and freezes their account. Tries to do, the federal agency explained.
The SEC said in its complaint that it is seeking to prohibit Anthony from trading securities without the required funds in his account, and to compel him to disclose the incident if he opens a brokerage account in the future. wants to
Anthony could not immediately be reached for comment by Insider.
Source: markets.businessinsider.com
