SEC Settles $1.4 Million Free-Riding Case Against Mayur Baviskar
SEC settles with Mayur Baviskar over a $1.4 million free-riding scheme, seeking $6,078.16 disgorgement, $1,914.41 interest and a $50,000 penalty in court.
Summary
The SEC filed a settled action on August 25, 2026, alleging Mayur Baviskar of Morrisville, North Carolina, used $377,200 of unfunded deposits at nine broker-dealers between March 2019 and September 2024. Baviskar allegedly exploited instant deposit credit to purchase and sell more than $1.4 million of securities and withdraw $6,078.16 in profits. He allegedly initiated transfers from accounts lacking sufficient funds and placed stop-payment orders on transfers from funded accounts. The deposits were later reversed, and the broker-dealers allegedly would not have extended credit or permitted trading had they known.
Without admitting the allegations, Baviskar consented to a final judgment, subject to court approval, permanently enjoining Exchange Act Section 10(b) and Rule 10b-5 violations, imposing a conduct-based injunction, and requiring $6,078.16 in disgorgement, $1,914.41 in prejudgment interest and a $50,000 civil penalty. The case, SEC v. Mayur Baviskar, No. 5:26-CV-00600-BO, was filed in the Eastern District of North Carolina. Mark Eric Harrison conducted the investigation under Thomas B. Bosch and Justin Jeffries, with trial counsel Robert Schroeder supervised by M. Graham Loomis, all from the SEC’s Atlanta Regional Office.
Positives
- $6,078.16 in alleged trading profits would be disgorged if the court approves the final judgment.
- $1,914.41 in prejudgment interest and a $50,000 civil penalty would supplement the proposed disgorgement.
- A permanent Section 10(b) and Rule 10b-5 injunction would restrict future securities fraud violations.
- Nine broker-dealers ultimately reversed deposits rejected for insufficient funds or affected by stop-payment orders.
Risks & concerns
- More than $1.4 million of securities were allegedly purchased and sold without sufficient funds to pay for the trades.
- $377,200 of unfunded deposits allegedly exploited instant credit across nine broker-dealers from March 2019 through September 2024.
- $6,078.16 in trading profits was withdrawn before the underlying deposits were reversed, according to the complaint.
- Baviskar did not admit the allegations, and the proposed final judgment remains subject to court approval.