SEC v. Tyrone Johnny Lacy, Jr., No. 8:24-cv-01145, Middle District of Florida (May 13, 2024) — Complaint

UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

SECURITIES AND EXCHANGE
COMMISSION,

   Plaintiff,

v.

TYRONE JOHNNY LACY, JR.,

                                 Defendant.

Case No.   24-cv-1145

COMPLAINT FOR PERMANENT INJUNCTIVE RELIEF
AND OTHER RELIEF AND DEMAND FOR JURY TRIAL

 The plaintiff, Securities and Exchange Commission (“Commission”), files
this Complaint and alleges as follows:
I. SUMMARY
1. This action involves a “free-riding” trading scheme orchestrated by
defendant Tyrone Johnny Lacy, Jr. (“Lacy” or “Defendant”), a resident of Seffner,
Florida. As in free-riding schemes generally, Lacy fraudulently abused “instant
deposit” credit extended by two broker-dealer firms to trade securities without
ever funding the brokerage account to which the credit was extended. If the
trading was profitable, Lacy would pocket the profit, but if the trading was
unprofitable, the brokerage firm would sustain the loss.

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2. To effectuate the scheme, Lacy initiated electronic deposits from his
bank accounts into his brokerage accounts—despite knowing that his bank
accounts had insufficient funds to cover those deposits. Lacy then bought and
sold securities in the brokerage accounts, taking advantage of “instant deposit”
credit extended by the brokerage firms that allowed him to trade securities
before funds from his bank accounts were actually deposited into the brokerage
accounts.
3. Pursuant to this scheme, Lacy falsely represented to one brokerage
firm his profession, his salary, and the amount of cash he had available; made
$270,000 of unfunded deposits over two brokerage accounts, all of which were
later reversed for insufficient funds; based on those phony deposits, bought and
sold approximately $330,000 of equity and exchange-traded securities; caused a
brokerage firm to lose over $1,500 as a result of unfunded trading losses; and
personally obtained over $1,600 of ill-gotten gains as a result of his fraudulent
conduct.
4. By engaging in this conduct, Lacy is liable, and unless enjoined, is
likely to continue to violate Section 10(b) of the Exchange Act of 1934 (the
“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5].

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II. VIOLATIONS AND RELIEF SOUGHT
A. Violations
5. Lacy, by virtue of his conduct, directly or indirectly, has engaged in
violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange
Act”) and Rule 10b-5 thereunder.
B. Relief Sought
6. The Commission seeks against the Defendant: (i) permanent
injunctive relief; (ii) a conduct-based injunction prohibiting Lacy from: (a)
directly or indirectly trading securities in any brokerage account he owns,
controls, or has access to that does not contain settled cash equal to or greater
than the amount of the securities trade(s) and (b) opening a brokerage account
without first providing to the relevant brokerage firm(s) a copy of the
Commission’s filed complaint in this matter and any judgment that the
Commission may obtain against him in this matter; (iii) disgorgement, including
pre-judgment interest; and (iv) civil monetary penalties.
III. JURISDICTION AND VENUE
7. The Commission brings this action pursuant to authority conferred
upon it by Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d)-(e)].
8. This Court has jurisdiction over this action pursuant to Sections
21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].

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9. The Defendant, directly and indirectly, has made use of the mails,
the means and instrumentalities of transportation and communication in
interstate commerce, and the means and instrumentalities of interstate
commerce, in connection with the transactions, acts, practices, and courses of
business alleged in this Complaint.
10. Venue lies in this Court pursuant to Section 27 of the Exchange Act
[15 U.S.C. § 78aa] because the Defendant resides within the Middle District of
Florida and certain of the transactions, acts, practices, and courses of business
constituting violations of the Exchange Act have occurred within the Middle
District of Florida. For instance, internet protocol address data indicates that the
Defendant initiated deposits and executed securities trades while located in the
Middle District of Florida.
IV. THE DEFENDANT
11. Tyrone Johnny Lacy, Jr., age 25, is a resident of Seffner, Florida.
During the Relevant Period, defined below, he worked as a warehouse and
backroom employee for several retailers and a consumer electronics distributor.
V. FACTS
12. From at least October 1, 2022, to October 26, 2022 (the “Relevant
Period”), Lacy engaged in acts, practices, or courses of business that operated as

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a fraud upon multiple brokerage firms, and made false and misleading
statements to at least one such firm.
A. Lacy Engages in Free-Riding Conduct at Broker A
13. On or about November 19, 2021, Lacy submitted an online
application to open an account at Broker A. Broker A opened an account in
Lacy’s name.
14. Lacy’s brokerage account at Broker A included “instant buying
power” for pending bank deposits. “Instant buying power” allowed Lacy to buy
and sell securities prior to Lacy’s bank deposits settling into Lacy’s account at
Broker A.
15. Using Broker A’s online platform, Lacy linked his Broker A account
to his bank accounts at Bank X and Bank Y.
16. In October 2022, Lacy initiated three Automated Clearing House
deposits totaling $70,000 from his account at Bank X into his account at Broker A
using the online platform at Broker A. Specifically, he initiated (i) a deposit on
October 3 in the amount of $20,000 and (ii) deposits on October 4 and 5, each in
the amount of $25,000. At the time Lacy initiated the deposits, Lacy’s account at
Bank X did not contain sufficient funds to cover the deposits.

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17. On October 6, 7, and 10, 2022, Lacy’s deposits into his Broker A
account were rejected because Lacy’s Bank X account contained insufficient
funds to cover the deposits.
18. By initiating $70,000 in unfunded deposits from his Bank X account
to his Broker A account, Lacy implicitly falsely represented that there were
sufficient funds in the Bank X account to cover those deposits.
 Lacy knew or was
reckless in not knowing that he was making those implicit statements and that
they were false.
19. Those implicit false statements to Broker A were material. A
reasonable broker-dealer firm would use those statements in deciding whether to
permit Lacy to continue to maintain an account and purchase and sell securities
using that account.
20. From October 3 to 10, 2022, Lacy used Broker A’s “instant buying
power” credit to make approximately $2,700 of securities purchases. On October
3, 2022, Lacy initiated a purchase order for common stock of Public Company A.
On October 4, 2022, Lacy initiated a purchase order for common stock of Public
Company B. On October 10, 2022, Lacy initiated a purchase order for common
stock of Public Company C. The orders Lacy initiated ultimately resulted in Lacy
purchasing common stock in Public Company A, Public Company B, and Public
Company C.

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21. On October 10, 2022, using the online platform at Broker A, Lacy
sold those securities at a net profit.
22. On October 19, 2022, Lacy used Broker A’s online platform to
withdraw $183 from his Broker A account and deposit it into his account at Bank
Y.
23. Lacy acted with scienter with respect to his free-riding conduct at
Broker A. First, when Lacy initiated unfunded deposits on October 3, 4, and 5—
and then bought and sold securities based on those deposits—Lacy knew or was
reckless in not knowing that his account at Bank X lacked sufficient funds to
cover those deposits. In addition, Lacy was aware of free-riding schemes prior to
and during the Relevant Period.
B. Lacy Engaged in Free-Riding Conduct at Broker B
24. On or about October 23, 2022, Lacy submitted an online application
to open an account at Broker B. Broker B opened an account in Lacy’s name.
25. Lacy made false statements to Broker B in his application. In that
application, Lacy stated: (1) that his annual income was $180,000; (2) that his
liquid net worth was $500,000; and (3) that he was an “accounting professional.”
26. Those statements were false. At the time he submitted his
application, Lacy did not have annual income of $180,000; did not have liquid net

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worth of $500,000; and was not an accounting professional. Lacy knew or was
reckless in not knowing that the statements were false when made.
27. The false statements in Lacy’s application to Broker B were material.
A reasonable broker-dealer firm would use those statements in deciding whether
to permit Lacy to open an account and purchase and sell securities using that
account.
28. As the person who made the application, Lacy was the maker of the
false statements in the application to Broker B and had ultimate authority over
the statements.
29. Lacy’s brokerage account at Broker B included “same day trading”
instant deposit credit, which allowed Lacy to trade securities prior to the
settlement of his deposits from his banks into his account with Broker B.
30. Using the online platform at Broker B, Lacy linked his Broker B
account to (i) his account at Bank Y and (ii) his account with a money-transfer
application (“Application”) that, in turn, was linked to an account at Bank Z.
31. On October 24 and 25, 2022, Lacy used the online platform at Broker
B to initiate two $100,000 deposits to his account at Broker B.
32. Lacy knew or was reckless in not knowing that his Bank Z account
lacked sufficient funds to cover the two $100,000 deposits.

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33. In the weeks leading to the October 24 and 25, 2022 transactions,
Lacy had used the Application to initiate approximately 20 transactions—for
amounts far less than $100,000—that were declined for lack of sufficient funds in
the linked account at Bank Z.
34. When Lacy initiated these two $100,000 deposits, the Bank Z account
contained a balance of $7.09.
35. When Lacy initiated the two $100,000 deposits, he had access to his
balance in the Bank Z account through the Application.
36. Two days after each $100,000 deposit, Bank Z reversed the deposits
for lack of funds in Lacy’s Bank Z Account.
37. By initiating $200,000 in unfunded deposits from his Bank Z account
to his Broker B account, Lacy implicitly falsely represented that there were
sufficient funds in the Bank Z account to cover those deposits.
38. Those implicit false statements to Broker B were material. A
reasonable broker-dealer firm would use those statements in deciding whether to
permit Lacy to continue to maintain an account and purchase and sell securities
using that account.
39. Prior to the reversals by Bank Z, on October 25 and 26, 2022, Lacy
made approximately $329,000 of securities purchases in his Broker B account
using the “same day trading” credit extended by Broker B. On October 25, 2022,

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Lacy initiated purchase orders of common stock of Public Company D and
Public Company E and also purchased shares of Exchange Traded Fund A. On
October 26, 2022, Lacy initiated purchase orders of common stock of Public
Company B, Public Company F, Public Company G, and Public Company H. The
orders Lacy initiated ultimately resulted in Lacy purchasing common stock in
Public Company D, Public Company B, Public Company F, Public Company G,
and Exchange Traded Fund A.
40. On October 25 and 26, 2022, Lacy sold those securities at a net profit
using the online platform at Broker B.
41. On October 25, 2022, Lacy transferred $1,478 from his Broker B
brokerage account to his account at Bank Y.
42. As a result of Lacy’s scheme, Broker B lost $1,516.57, consisting of (i)
Lacy’s $1,478 withdrawal and (ii) $48.57 in unpaid margin interest charged to
Lacy’s account.
43. Lacy acted with scienter with respect to his free-riding conduct at
Broker B. First, Lacy knew, at the time of his statements on his account
application, that he was making misrepresentations regarding his annual
income, liquid net worth, and profession. Second, when Lacy initiated deposits
on October 24 and 25—and then bought and sold securities based on those
deposits—Lacy knew (or was reckless in not knowing) that his account at Bank Z

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lacked sufficient funds to cover the deposits. Finally, Lacy was aware of free-
riding schemes prior to and during the Relevant Period.
44. Lacy’s scienter throughout the Relevant Period—with respect to
free-riding conduct and Broker A and Broker B—is further evidenced by a series
of additional unfunded deposits made by Lacy at other broker-dealer firms.
Specifically, Lacy initiated unfunded deposits at Broker C in August 2022; at
Broker D in October 2022; at Broker E in October 2022; at Broker F in October
2022; at Broker G in October 2022 and November 2022; and at Broker H in
December 2022.
C. Lacy’s Conduct Was in Connection With the Purchase or Sale of
Securities.

45. Lacy’s conduct, described above, was in connection with the
purchase or sale of securities. Lacy fraudulently initiated unfunded deposits
from his bank accounts to his brokerage accounts and then used the credit
provided by the broker-dealers to purchase and sell securities.
V. CLAIMS FOR RELIEF
COUNT I—FRAUD BY DEFENDANT LACY
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]

46. Paragraphs 1 through 45 are hereby realleged and are incorporated
herein by reference.

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47. By engaging in the conduct described above, Lacy, knowingly or
recklessly, in connection with the purchase or sale of securities, by the use of the
means and instrumentalities of interstate commerce or by use of the mails,
directly or indirectly:
a) employed devices, schemes, or artifices to defraud;
b) made untrue statements of material facts or omitted to state
material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and
c) engaged in acts, practices, or courses of business which would
or did operate as a fraud and deceit upon the purchasers of such securities, all as
more particularly described above.
48. By reason of the foregoing, Defendant Lacy, directly or indirectly,
has violated and, unless enjoined, will continue to violate Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-
5].
VI. PRAYER FOR RELIEF
WHEREFORE, Plaintiff respectfully prays that the Court enter a Final
Judgment:

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I.
Finding that Defendant violated the statutes and rules set forth in this
Complaint.
II.
Permanently restraining and enjoining Defendant Lacy, and all persons in
active concert or participation with him, from violating, directly or indirectly, the
statutes and rules set forth in this Complaint.
III.
Permanently restraining and enjoining Defendant Lacy, and all persons in
active concert or participation with him, from: (a) directly or indirectly trading
securities in any brokerage account he owns, controls, or has access to that does
not contain settled cash equal to or greater than the amount of the securities
trade(s) and (b) opening a brokerage account without first providing to the
relevant brokerage firm(s) a copy of the Commission’s filed complaint in this
matter and any judgment that the Commission may obtain against him in this
matter.
IV.
 Ordering Defendant Lacy to disgorge all ill-gotten gains derived from his
illegal conduct as set forth in this Complaint, together with prejudgment interest

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thereon pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C.
§ 78u(d)(5) and (d)(7)].
V.
Ordering Defendant Lacy, pursuant to Section 21(d)(3) of the Exchange
Act [15 U.S.C. § 78u(d)(3)], to pay a civil monetary penalty.
VI.
Retaining jurisdiction over this action to implement and carry out the
terms of all orders and decrees that may have been entered.
VI.
Granting such other and further relief as this Court may deem just,
equitable, and appropriate in connection with the enforcement of the federal
securities laws.

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VII. JURY TRIAL DEMAND
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff
demands a trial by jury on all claims so triable.

Dated: May 13, 2024
RESPECTFULLY SUBMITTED,
/s Sharan Lieberman
Sharan E. Lieberman
Jason M. Spitalnick
U.S. Securities and Exchange Commission
1961 Stout Street, Suite 1700
Denver, CO 80294-1961
Telephone: 303-844-1000
Email: [email protected]
[email protected]
Attorneys for Plaintiff
U.S. Securities and Exchange Commission

UNITED STATES DISTRICT COURT FOR THE 
MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 
 
 
SECURITIES AND EXCHANGE 
COMMISSION,  
 
   Plaintiff, 
 
v. 
 
TYRONE JOHNNY LACY, JR., 
 
   Defendant. 
 

 
 
 
 
Case No.   24-cv-1145 
 

 
COMPLAINT FOR PERMANENT INJUNCTIVE RELIEF 
AND OTHER RELIEF AND DEMAND FOR JURY TRIAL 

 
 The plaintiff, Securities and Exchange Commission (“Commission”), files 

this Complaint and alleges as follows: 

I. SUMMARY 

1. This action involves a “free-riding” trading scheme orchestrated by 

defendant Tyrone Johnny Lacy, Jr. (“Lacy” or “Defendant”), a resident of Seffner, 

Florida. As in free-riding schemes generally, Lacy fraudulently abused “instant 

deposit” credit extended by two broker-dealer firms to trade securities without 

ever funding the brokerage account to which the credit was extended. If the 

trading was profitable, Lacy would pocket the profit, but if the trading was 

unprofitable, the brokerage firm would sustain the loss. 

Case 8:24-cv-01145   Document 1   Filed 05/13/24   Page 1 of 15 PageID 1



 
2 

 

2. To effectuate the scheme, Lacy initiated electronic deposits from his 

bank accounts into his brokerage accounts—despite knowing that his bank 

accounts had insufficient funds to cover those deposits. Lacy then bought and 

sold securities in the brokerage accounts, taking advantage of “instant deposit” 

credit extended by the brokerage firms that allowed him to trade securities 

before funds from his bank accounts were actually deposited into the brokerage 

accounts. 

3. Pursuant to this scheme, Lacy falsely represented to one brokerage 

firm his profession, his salary, and the amount of cash he had available; made 

$270,000 of unfunded deposits over two brokerage accounts, all of which were 

later reversed for insufficient funds; based on those phony deposits, bought and 

sold approximately $330,000 of equity and exchange-traded securities; caused a 

brokerage firm to lose over $1,500 as a result of unfunded trading losses; and 

personally obtained over $1,600 of ill-gotten gains as a result of his fraudulent 

conduct. 

4. By engaging in this conduct, Lacy is liable, and unless enjoined, is 

likely to continue to violate Section 10(b) of the Exchange Act of 1934 (the 

“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]. 

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II. VIOLATIONS AND RELIEF SOUGHT 

A. Violations 

5. Lacy, by virtue of his conduct, directly or indirectly, has engaged in 

violations of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange 

Act”) and Rule 10b-5 thereunder. 

B. Relief Sought  

6. The Commission seeks against the Defendant: (i) permanent 

injunctive relief; (ii) a conduct-based injunction prohibiting Lacy from: (a) 

directly or indirectly trading securities in any brokerage account he owns, 

controls, or has access to that does not contain settled cash equal to or greater 

than the amount of the securities trade(s) and (b) opening a brokerage account 

without first providing to the relevant brokerage firm(s) a copy of the 

Commission’s filed complaint in this matter and any judgment that the 

Commission may obtain against him in this matter; (iii) disgorgement, including 

pre-judgment interest; and (iv) civil monetary penalties. 

III. JURISDICTION AND VENUE 

7. The Commission brings this action pursuant to authority conferred 

upon it by Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d)-(e)]. 

8. This Court has jurisdiction over this action pursuant to Sections 

21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

Case 8:24-cv-01145   Document 1   Filed 05/13/24   Page 3 of 15 PageID 3



 
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9. The Defendant, directly and indirectly, has made use of the mails, 

the means and instrumentalities of transportation and communication in 

interstate commerce, and the means and instrumentalities of interstate 

commerce, in connection with the transactions, acts, practices, and courses of 

business alleged in this Complaint. 

10. Venue lies in this Court pursuant to Section 27 of the Exchange Act 

[15 U.S.C. § 78aa] because the Defendant resides within the Middle District of 

Florida and certain of the transactions, acts, practices, and courses of business 

constituting violations of the Exchange Act have occurred within the Middle 

District of Florida. For instance, internet protocol address data indicates that the 

Defendant initiated deposits and executed securities trades while located in the 

Middle District of Florida. 

IV. THE DEFENDANT 

11. Tyrone Johnny Lacy, Jr., age 25, is a resident of Seffner, Florida. 

During the Relevant Period, defined below, he worked as a warehouse and 

backroom employee for several retailers and a consumer electronics distributor.  

V. FACTS 

12. From at least October 1, 2022, to October 26, 2022 (the “Relevant 

Period”), Lacy engaged in acts, practices, or courses of business that operated as 

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a fraud upon multiple brokerage firms, and made false and misleading 

statements to at least one such firm. 

A. Lacy Engages in Free-Riding Conduct at Broker A 

13. On or about November 19, 2021, Lacy submitted an online 

application to open an account at Broker A. Broker A opened an account in 

Lacy’s name. 

14. Lacy’s brokerage account at Broker A included “instant buying 

power” for pending bank deposits. “Instant buying power” allowed Lacy to buy 

and sell securities prior to Lacy’s bank deposits settling into Lacy’s account at 

Broker A. 

15. Using Broker A’s online platform, Lacy linked his Broker A account 

to his bank accounts at Bank X and Bank Y. 

16. In October 2022, Lacy initiated three Automated Clearing House 

deposits totaling $70,000 from his account at Bank X into his account at Broker A 

using the online platform at Broker A. Specifically, he initiated (i) a deposit on 

October 3 in the amount of $20,000 and (ii) deposits on October 4 and 5, each in 

the amount of $25,000. At the time Lacy initiated the deposits, Lacy’s account at 

Bank X did not contain sufficient funds to cover the deposits. 

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17. On October 6, 7, and 10, 2022, Lacy’s deposits into his Broker A 

account were rejected because Lacy’s Bank X account contained insufficient 

funds to cover the deposits. 

18. By initiating $70,000 in unfunded deposits from his Bank X account 

to his Broker A account, Lacy implicitly falsely represented that there were 

sufficient funds in the Bank X account to cover those deposits. Lacy knew or was 

reckless in not knowing that he was making those implicit statements and that 

they were false. 

19. Those implicit false statements to Broker A were material. A 

reasonable broker-dealer firm would use those statements in deciding whether to 

permit Lacy to continue to maintain an account and purchase and sell securities 

using that account. 

20. From October 3 to 10, 2022, Lacy used Broker A’s “instant buying 

power” credit to make approximately $2,700 of securities purchases. On October 

3, 2022, Lacy initiated a purchase order for common stock of Public Company A. 

On October 4, 2022, Lacy initiated a purchase order for common stock of Public 

Company B. On October 10, 2022, Lacy initiated a purchase order for common 

stock of Public Company C. The orders Lacy initiated ultimately resulted in Lacy 

purchasing common stock in Public Company A, Public Company B, and Public 

Company C. 

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21. On October 10, 2022, using the online platform at Broker A, Lacy 

sold those securities at a net profit. 

22. On October 19, 2022, Lacy used Broker A’s online platform to 

withdraw $183 from his Broker A account and deposit it into his account at Bank 

Y. 

23. Lacy acted with scienter with respect to his free-riding conduct at 

Broker A. First, when Lacy initiated unfunded deposits on October 3, 4, and 5—

and then bought and sold securities based on those deposits—Lacy knew or was 

reckless in not knowing that his account at Bank X lacked sufficient funds to 

cover those deposits. In addition, Lacy was aware of free-riding schemes prior to 

and during the Relevant Period. 

B. Lacy Engaged in Free-Riding Conduct at Broker B 

24. On or about October 23, 2022, Lacy submitted an online application 

to open an account at Broker B. Broker B opened an account in Lacy’s name. 

25. Lacy made false statements to Broker B in his application. In that 

application, Lacy stated: (1) that his annual income was $180,000; (2) that his 

liquid net worth was $500,000; and (3) that he was an “accounting professional.” 

26. Those statements were false. At the time he submitted his 

application, Lacy did not have annual income of $180,000; did not have liquid net 

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worth of $500,000; and was not an accounting professional. Lacy knew or was 

reckless in not knowing that the statements were false when made. 

27. The false statements in Lacy’s application to Broker B were material. 

A reasonable broker-dealer firm would use those statements in deciding whether 

to permit Lacy to open an account and purchase and sell securities using that 

account. 

28. As the person who made the application, Lacy was the maker of the 

false statements in the application to Broker B and had ultimate authority over 

the statements. 

29. Lacy’s brokerage account at Broker B included “same day trading” 

instant deposit credit, which allowed Lacy to trade securities prior to the 

settlement of his deposits from his banks into his account with Broker B. 

30. Using the online platform at Broker B, Lacy linked his Broker B 

account to (i) his account at Bank Y and (ii) his account with a money-transfer 

application (“Application”) that, in turn, was linked to an account at Bank Z. 

31. On October 24 and 25, 2022, Lacy used the online platform at Broker 

B to initiate two $100,000 deposits to his account at Broker B. 

32. Lacy knew or was reckless in not knowing that his Bank Z account 

lacked sufficient funds to cover the two $100,000 deposits. 

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33. In the weeks leading to the October 24 and 25, 2022 transactions, 

Lacy had used the Application to initiate approximately 20 transactions—for 

amounts far less than $100,000—that were declined for lack of sufficient funds in 

the linked account at Bank Z. 

34. When Lacy initiated these two $100,000 deposits, the Bank Z account 

contained a balance of $7.09.  

35. When Lacy initiated the two $100,000 deposits, he had access to his 

balance in the Bank Z account through the Application.  

36. Two days after each $100,000 deposit, Bank Z reversed the deposits 

for lack of funds in Lacy’s Bank Z Account. 

37. By initiating $200,000 in unfunded deposits from his Bank Z account 

to his Broker B account, Lacy implicitly falsely represented that there were 

sufficient funds in the Bank Z account to cover those deposits. 

38. Those implicit false statements to Broker B were material. A 

reasonable broker-dealer firm would use those statements in deciding whether to 

permit Lacy to continue to maintain an account and purchase and sell securities 

using that account. 

39. Prior to the reversals by Bank Z, on October 25 and 26, 2022, Lacy 

made approximately $329,000 of securities purchases in his Broker B account 

using the “same day trading” credit extended by Broker B. On October 25, 2022, 

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Lacy initiated purchase orders of common stock of Public Company D and 

Public Company E and also purchased shares of Exchange Traded Fund A. On 

October 26, 2022, Lacy initiated purchase orders of common stock of Public 

Company B, Public Company F, Public Company G, and Public Company H. The 

orders Lacy initiated ultimately resulted in Lacy purchasing common stock in 

Public Company D, Public Company B, Public Company F, Public Company G, 

and Exchange Traded Fund A. 

40. On October 25 and 26, 2022, Lacy sold those securities at a net profit 

using the online platform at Broker B. 

41. On October 25, 2022, Lacy transferred $1,478 from his Broker B 

brokerage account to his account at Bank Y. 

42. As a result of Lacy’s scheme, Broker B lost $1,516.57, consisting of (i) 

Lacy’s $1,478 withdrawal and (ii) $48.57 in unpaid margin interest charged to 

Lacy’s account. 

43. Lacy acted with scienter with respect to his free-riding conduct at 

Broker B. First, Lacy knew, at the time of his statements on his account 

application, that he was making misrepresentations regarding his annual 

income, liquid net worth, and profession. Second, when Lacy initiated deposits 

on October 24 and 25—and then bought and sold securities based on those 

deposits—Lacy knew (or was reckless in not knowing) that his account at Bank Z 

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lacked sufficient funds to cover the deposits. Finally, Lacy was aware of free-

riding schemes prior to and during the Relevant Period. 

44. Lacy’s scienter throughout the Relevant Period—with respect to 

free-riding conduct and Broker A and Broker B—is further evidenced by a series 

of additional unfunded deposits made by Lacy at other broker-dealer firms. 

Specifically, Lacy initiated unfunded deposits at Broker C in August 2022; at 

Broker D in October 2022; at Broker E in October 2022; at Broker F in October 

2022; at Broker G in October 2022 and November 2022; and at Broker H in 

December 2022. 

C. Lacy’s Conduct Was in Connection With the Purchase or Sale of 
Securities. 
 

45. Lacy’s conduct, described above, was in connection with the 

purchase or sale of securities. Lacy fraudulently initiated unfunded deposits 

from his bank accounts to his brokerage accounts and then used the credit 

provided by the broker-dealers to purchase and sell securities. 

V. CLAIMS FOR RELIEF 

COUNT I—FRAUD BY DEFENDANT LACY 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]  

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] 
 

46. Paragraphs 1 through 45 are hereby realleged and are incorporated 

herein by reference. 

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47. By engaging in the conduct described above, Lacy, knowingly or 

recklessly, in connection with the purchase or sale of securities, by the use of the 

means and instrumentalities of interstate commerce or by use of the mails, 

directly or indirectly: 

a) employed devices, schemes, or artifices to defraud; 

b) made untrue statements of material facts or omitted to state 

material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and 

c) engaged in acts, practices, or courses of business which would 

or did operate as a fraud and deceit upon the purchasers of such securities, all as 

more particularly described above. 

48. By reason of the foregoing, Defendant Lacy, directly or indirectly, 

has violated and, unless enjoined, will continue to violate Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-

5]. 

VI. PRAYER FOR RELIEF 

WHEREFORE, Plaintiff respectfully prays that the Court enter a Final 

Judgment: 

 

 

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I. 

Finding that Defendant violated the statutes and rules set forth in this 

Complaint. 

II. 

Permanently restraining and enjoining Defendant Lacy, and all persons in 

active concert or participation with him, from violating, directly or indirectly, the 

statutes and rules set forth in this Complaint. 

III. 

Permanently restraining and enjoining Defendant Lacy, and all persons in 

active concert or participation with him, from: (a) directly or indirectly trading 

securities in any brokerage account he owns, controls, or has access to that does 

not contain settled cash equal to or greater than the amount of the securities 

trade(s) and (b) opening a brokerage account without first providing to the 

relevant brokerage firm(s) a copy of the Commission’s filed complaint in this 

matter and any judgment that the Commission may obtain against him in this 

matter. 

IV. 

 Ordering Defendant Lacy to disgorge all ill-gotten gains derived from his 

illegal conduct as set forth in this Complaint, together with prejudgment interest 

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thereon pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. 

§ 78u(d)(5) and (d)(7)]. 

V. 

Ordering Defendant Lacy, pursuant to Section 21(d)(3) of the Exchange 

Act [15 U.S.C. § 78u(d)(3)], to pay a civil monetary penalty. 

VI. 

Retaining jurisdiction over this action to implement and carry out the 

terms of all orders and decrees that may have been entered. 

VI. 

Granting such other and further relief as this Court may deem just, 

equitable, and appropriate in connection with the enforcement of the federal 

securities laws. 

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VII. JURY TRIAL DEMAND 

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff 

demands a trial by jury on all claims so triable. 

 

Dated: May 13, 2024 

RESPECTFULLY SUBMITTED, 

/s Sharan Lieberman 
Sharan E. Lieberman  
Jason M. Spitalnick 
U.S. Securities and Exchange Commission 
1961 Stout Street, Suite 1700 
Denver, CO 80294-1961 
Telephone: 303-844-1000  
Email: [email protected]         
[email protected] 
Attorneys for Plaintiff 
U.S. Securities and Exchange Commission 

 

 

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