The Securities and Exchange Commission (SEC) has filed a complaint against a pretzel-shop worker who allegedly obtained $200,000 of advance credit by making bogus deposits and used it to buy stocks including Tesla, GameStop, and Nvidia.
How the Fraud Happened?
According to the SEC complaint, Deyonte Jahtori Anthony, 23, was a part-time employee of an Auntie Anne’s in North Carolina last summer. On July 1, 2023, he applied for a self-directed brokerage account, claiming he earned between $25,000 and $50,000 a year when he was only making about $400 a month.
Anthony linked his trading account to a bank account with only 9 cents in it, then initiated unfunded deposits totaling $1 million between July 5 and 6. The pending deposits granted him access to $200,000 in immediate credit, which he plowed into eight stocks and an exchange-traded fund on July 6.
What Stocks He Bought?
The pretzel-shop worker piled about $85,000 into Apple, $78,000 into GameStop, $22,000 into Nvidia, $13,000 into AMC Entertainment, and $700 into Tesla. He invested another $800 across Cano Health, Electronic Arts, Resolute Forest Products, and ETFMG Prime Cyber Security.
GameStop and AMC are both “meme stocks” that skyrocketed in price in early 2021, as retail investors bought them en masse in a bid to punish short sellers and pocket huge gains in a matter of days. Tesla and Nvidia also have passionate fanbases who expect the pair to win big from the artificial-intelligence revolution. Intense hype has helped to nearly double and more than triple the automaker and graphics-chip company’s respective stock prices this year.
How the Broker Caught On?
The broker discovered Anthony’s alleged fraud the next day, froze his account, and liquidated all of his holdings. The short-lived purchases proved lucrative; the broker made about a $7,000 profit, including a roughly $4,700 return on GameStop, $1,600 on Apple, and $800 on Nvidia. All but one of Anthony’s trades were in the green when his broker cashed out.
The SEC accused Anthony of violating the antifraud provisions of the federal securities laws and sought a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and an order barring him from participating in any offering of penny stock.
