SEC v. ANDREW M. KOMAROW, No. 3:23-cv-01599, District of Connecticut (Dec. 8, 2023) — Complaint

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,
 C.A. No. ______
v.

ANDREW M. KOMAROW, JURY TRIAL DEMANDED

Defendant.

COMPLAINT

 Plaintiff Securities and Exchange Commission (“Commission”) alleges as follows against
Defendant Andrew M. Komarow (“Komarow” or “Defendant”) and hereby demands a jury trial.
SUMMARY
1. This action involves a $6.9 million “free-riding” securities trading scheme
perpetrated by Komarow.
2. “Free-riding” is a fraudulent practice used by securities traders who seek to
exploit the “immediate access” credit extended by certain broker-dealers in advance of incoming
deposits of cash from bank accounts.
3.  By seeking to transfer funds into his brokerage accounts from his bank accounts
that he knew lacked sufficient funds to cover the transfers, Komarow exploited the “immediate
access” credit extended by certain broker-dealers to buy and sell securities. Generally, immediate
access at certain broker-dealers means that those broker-dealers will allow a customer to begin
using deposited money immediately to place trades before the customer’s check or electronic
transfer from another financial account into their brokerage account has actually cleared.

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Komarow carried out his scheme by trading in his brokerage account during the “immediate
access” period when he knew he had insufficient funds in his bank account to cover the transfer
into his brokerage account, and thus his brokerage account would never get the money to cover
his trading activity.  He attempted to earn and withdraw trading profits from his brokerage
accounts before the broker-dealers were notified of the insufficient funds in his associated bank
accounts and froze his brokerage accounts.
4. Specifically, between October 13, 2022 and January 30, 2023, (the “Relevant
Period”), Komarow engaged in a free-riding scheme using his brokerage accounts at four
different broker-dealers.
5. During the Relevant Period, Komarow knowingly, or at least recklessly, requested
$6.9 million in deposits into 11 of his brokerage accounts at 4 broker-dealers, which were later
reversed due to insufficient funds in the bank accounts from which he sought to transfer those
funds.  Before those fund transfers were reversed, Komarow was permitted by the broker-dealers
to use some of those funds during the “immediate access” period to engage in speculative
securities trading.
6. As a result of his speculative securities trades, Komarow made at least $615,031
in profits.  Komarow withdrew those profits from his brokerage accounts at one broker-dealer.
7. Komarow’s scheme left the four broker-dealers holding his brokerage accounts
with losses totaling at least $3,352,407.
8. In addition, to open at least one of his brokerage accounts, Komarow made
material misrepresentations in his brokerage account opening documents and deceptively used
the access credentials (including username and password) of others to access the brokerage
firm’s online account systems.

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9. By this conduct, Komarow violated, and unless enjoined will continue to violate,
Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §78j(b)] and
Rule 10b-5 thereunder [17 C.F.R. §240.10b-5].
10. As the result of Komarow’s violation, the Commission seeks permanent
injunctive relief, a conduct-based injunction, an officer and director bar, disgorgement with
prejudgment interest, and civil penalties against Komarow.
JURISDICTION AND VENUE
11. 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].
12. The Defendant, directly or indirectly, made use of the mails, or the means or
instrumentalities of transportation or communication in interstate commerce in connection with
the transactions, acts, practices, and courses of business alleged in this Complaint.
13. Venue is proper in this district pursuant to Section 27 of the Exchange Act [15
U.S.C. §78aa] because Komarow resides in Connecticut and certain of the transactions, acts,
practices and courses of conduct constituting violations of the federal securities laws occurred
within this district.
THE DEFENDANT
14. Andrew M. Komarow, age 34, is a resident of Avon, Connecticut. From 2010
through the Relevant Period, Komarow was associated with a broker-dealer firm as a general
securities principal and was associated with an investment advisory firm as an investment
adviser representative. Komarow held multiple licenses issued by the Financial Industry
Regulatory Association, including Series 6, Series 7, Series 63, and Series 65 licenses at various
times.

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FACTS
Komarow’s Free-Riding at Broker-Dealer 1
15. Komarow opened a brokerage account with Broker-Dealer 1 in March 2013. On
October 13, 2022, Komarow knowingly, or at least recklessly, made a $200,000 automated
clearinghouse (or “ACH,” a system of transferring funds electronically between financial
institutions or accounts) deposit into his brokerage account at Broker-Dealer 1 from a bank
account at Bank A that had less than $60,000 at the time of the requested transfer. Rather than
waiting for the ACH transfer to clear, Broker-Dealer 1 allowed Komarow immediate access to
the purportedly transferred funds to engage in securities trading.  Komarow used that immediate
access allowed by Broker-Dealer 1 to make a large number of high-risk trades intended to yield
an immediate payoff in his brokerage account. Days later the ACH transfer was rejected for
insufficient funds and reversed from Komarow’s brokerage account at Broker-Dealer 1.
16. Komarow knowingly, or at least recklessly, made three additional ACH transfers
from his bank account at Bank A to his brokerage account at Broker-Dealer 1 on October 20 and
21, 2022, totaling $500,000. He again took advantage of the immediate access to those funds
provided by Broker-Dealer 1 to make high-risk trades. Bank A later rejected these three
requested ACH transfers for insufficient funds, as Komarow’s Bank A account had less than
$3,000 at the time he initiated each of the ACH transfers.
17. At the time he engaged in the above free-riding activity, Komarow was associated
with an investment advisory firm (the “Investment Adviser”) as an investment adviser
representative, where he managed clients’ investment accounts and offered his clients advice on
their accounts.

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18. On or about October 25, 2022, Broker-Dealer 1 notified the Investment Adviser
that there were problems with Komarow’s personal brokerage account. The Investment Adviser
learned that these problems included trades that were “not fully paid for.” Broker-Dealer 1 also
put restrictions on Komarow’s brokerage account.
19. Komarow made multiple calls to Broker-Dealer 1 on November 8, 2022 and
persuaded Broker-Dealer 1 to restore his access to his brokerage account. Komarow had already
opened a new brokerage account at Broker-Dealer 1 on October 30, 2022, and from November
11 through November 14, 2022, Komarow opened six additional brokerage accounts at Broker-
Dealer 1.
20. From November 10 through November 15, 2022, Komarow knowingly, or at least
recklessly, made 10 ACH transfer requests totaling $2.5 million into all 8 of the brokerage
accounts he had opened by November 14, 2022.  These ACH transfer requests, all for $250,000
each, were all made from a bank account at Bank A that had less than $4,000 at the time of the
requests. Komarow again used the immediate access to those funds provided by Broker-Dealer 1
to make high risk trades. Bank A later rejected all 10 of Komarow’s ACH transfer requests for
insufficient funds.
21. On November 17, 2022, Komarow knowingly, or at least recklessly, made 3 ACH
transfer requests totaling $400,000 from a second bank account at Bank A that had less than
$45,000 at the time and again directed those funds to his brokerage accounts at Broker-Dealer 1.
He again used those funds to execute high risk securities trades. Bank A later rejected all 3 of the
ACH requests for insufficient funds.
22. Due to Komarow’s continued free-riding activity, Broker-Dealer 1 restricted
Komarow’s access to his brokerage accounts and also to the accounts of his advisory clients at

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the Investment Adviser.   Broker-Dealer 1 expressed that Komarow’s activity violated trading
rules.
23. On the evening of November 17, 2022, Komarow was informed by the
Investment Adviser that his employment was being terminated, effective immediately, due to the
activity in his personal brokerage account at Broker-Dealer 1. Not only were Komarow’s trades
high-risk, but his activity in his personal brokerage account at Broker-Dealer 1 also adversely
impacted his advisory clients at the Investment Adviser because Broker-Dealer 1 prevented
Komarow from accessing any of his advisory client accounts that were held at Broker-Dealer 1.
24. From October 14, 2022 through November 15, 2022, Komarow withdrew at least
$615,031 in profits from his brokerage accounts at Broker-Dealer 1.
25. Combined, Komarow’s 8 brokerage accounts with Broker-Dealer 1 had negative
account balances totaling $264,656 when they were restricted.  Komarow’s conduct thus caused
Broker-Dealer 1 to incur losses of at least $264,656.
Komarow’s Attempted Free-Riding at Broker-Dealer 2
26. Komarow had a brokerage account with Broker-Dealer 2, which he opened in
January 2017.
27. On November 29, 2022, Komarow requested an ACH transfer of $20,000 to his
brokerage account at Broker-Dealer 2 from Bank B, where he had less than $14,000 in his bank
account.
28. Broker-Dealer 2 did not give Komarow immediate access to the funds Komarow
had attempted to deposit, but instead put the deposit on hold until December 5, 2022.
29. Bank B rejected Komarow’s ACH transfer request for insufficient funds on
December 3, 2022.

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30. Komarow was not able to make any securities trades using his attempted ACH
deposit at Broker-Dealer 2.

Komarow’s Free-Riding at Broker-Dealer 3
31. Komarow had been associated with Broker-Dealer 3 as a general securities
principal since April 2016. As a general securities principal, Komarow was permitted to buy and
sell securities for his brokerage customers through Broker-Dealer 3, where he was also
authorized to supervise other Broker-Dealer 3 representatives.
32. On November 21, 2022, as a result of his activity at Broker-Dealer 1 and his
termination from the Investment Adviser, Broker-Dealer 3 informed Komarow that if he did not
find another investment adviser to work with in the next thirty days, his employment with
Broker-Dealer 3 would also be terminated.
33. On November 30, 2022, Komarow opened his own personal brokerage account at
Broker-Dealer 3. The brokerage account opening documentation included a form allowing him
to make ACH deposits and another form allowing him to make options trades. Options are a
trading strategy that can be used for speculative, high-risk trading. Komarow opened his
brokerage account and completed these forms online, using the access credentials of two of his
firm’s employees.
34. When opening his personal brokerage account at Broker-Dealer 3, Komarow
falsely represented that his liquid net worth was over $1 million to obtain the ability to do
options trading. In an “SWM Option Agreement and Disclosure Document,” which required its
completion in full to allow options trading, Komarow selected the highest option for his liquid
net worth in completing the form. Komarow electronically signed the form on November 30,
2022. When signing, Komarow certified that the information in the form was “true and correct.”

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Using the access credentials of one of his employees, he electronically signed the form with that
employee’s name as well on November 30, 2022.
35. Komarow made an initial $100 ACH deposit to his brokerage account at Broker-
Dealer 3 from his bank account at Bank B, for which he had available funds. On the next day,
December 1, 2022, Komarow knowingly, or at least recklessly, requested a $400,000 ACH
transfer and then knowingly, or at least recklessly, requested a separate $2 million ACH transfer
from his bank account at Bank B to his new brokerage account at Broker-Dealer 3. Komarow’s
bank account at Bank B had $100 in it at the time he requested these $2.4 million in transfers.
Komarow took advantage of the fact that Broker-Dealer 3 would allow him immediate access to
funds purportedly deposited through these ACH transfers by placing high-risk securities options
trades intended to yield an immediate payoff in his brokerage account at Broker-Dealer 3.
36. Broker-Dealer 3 attempted to contact Komarow regarding these trading activities
on December 1, 2022. Komarow did not answer the calls from Broker-Dealer 3 personnel, but
instead directed Employee A, a member of his staff who reported to Komarow and whose access
credentials he had used to open the brokerage account, to speak to Broker-Dealer 3 personnel.
37. Through electronic chats on the electronic communication platform known as
Microsoft Teams, Komarow instructed Employee A to tell Broker-Dealer 3 personnel that she
had initiated the trades Broker-Dealer 3 was calling about, when in fact Komarow had placed the
trades using Employee A’s credentials. When Broker-Dealer 3 personnel asked if there was more
money coming into the brokerage account, Komarow instructed Employee A to “say more than
he needs, say 900k.” This message illustrates that Komarow was aware that the money to pay for
these trades was not yet in Komarow’s brokerage account.

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38. Later the same day, Komarow offered Employee A a monetary bonus to get
Broker-Dealer 3 to execute the trades that Komarow had made with his purported ACH deposits.
Komarow told Employee A via Microsoft Teams: “lie, whatever you have to do, to get those
trades placed.” Although Broker-Dealer 3 personnel cancelled some of the trades Komarow had
requested, many of Komarow’s trades were executed after Broker-Dealer 3 personnel spoke to
Employee A.
39. The next day, December 2, 2022, Komarow knowingly, or at least recklessly,
requested a $600,000 ACH transfer from his bank account at Bank B, which had a $0 balance at
the time, to his brokerage account at Broker-Dealer 3. Komarow again used the immediate
access that Broker-Dealer 3 provided to those funds to make high risk securities trades.
40. All three of Komarow’s ACH transfer requests to Broker-Dealer 3, totaling $3
million, were ultimately rejected by Bank B for insufficient funds.
41. By December 5, 2022, Broker-Dealer 3 put restrictions on Komarow’s brokerage
account.
42. By December 5, 2022, Komarow’s brokerage account at Broker-Dealer 3 had a
negative balance of $3,087,020. Komarow’s free-riding scheme thus left Broker-Dealer 3 to
incur a loss of at least $3,087,020.
43. On December 5, 2022, Broker-Dealer 3’s Compliance Department emailed
Komarow. The Compliance Department gave Komarow “the opportunity to confirm” that he
“knowingly submitted ACH instructions without the sufficient funds to cover the transactions
that were ultimately placed in that account.” Komarow responded via email: “I don’t have the
funds. I do not know what I was thinking when this happened.”

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44. On December 6, 2022, Komarow was notified of the immediate termination of his
employment from Broker-Dealer 3.
Komarow’s Free-Riding at Broker-Dealer 4
45. Komarow opened a brokerage account with Broker-Dealer 4 in September 2010.
46. On January 27, 2023, Komarow knowingly, or at least recklessly, requested an
ACH transfer of $30,000 to his brokerage account at Broker-Dealer 4 from his bank account at
Bank B. At the time of his request, Komarow had less than $1,000 in available funds in his bank
account at Bank B. Bank B rejected the transfer for insufficient funds.
47. Before Bank B rejected the transfer, Komarow took advantage of the fact that
Broker-Dealer 4 gave him immediate access to the funds he had purported to transfer to his
brokerage account.  Komarow executed one large and unprofitable securities trade, which left a
negative balance of $730 in his brokerage account at Broker-Dealer 4.  Komarow’s free-riding
scheme thus left Broker-Dealer 4 to incur a loss of $730.
48. On January 30, 2023, Komarow knowingly, or at least recklessly, requested an
ACH transfer of $250,000 to his brokerage account at Broker-Dealer 4 from his bank account at
Bank B. Komarow had less than $5,000 in his bank account at Bank B at the time he requested
this transfer.
49. Broker-Dealer 4 had placed restrictions on Komarow’s brokerage account after
his previous deposit was rejected for insufficient funds, and Komarow was not able to make any
trades using this purported $250,000 ACH deposit, which was ultimately rejected by Bank B for
insufficient funds.
*                                                         *                                                     *

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50. In total during the Relevant Period, Komarow requested 23 ACH transfers
totaling $6.9 million that were rejected by his banks for insufficient funds, as shown in the chart
below:
Institution Date of ACH Amount of ACH
Available Bank
Account Balance*
*At beginning of day
Broker-Dealer 1 10/13/22 $200,000 $57,492.08
Broker-Dealer 1 10/20/22 $200,000 $874.86
Broker-Dealer 1 10/20/22 $50,000 $874.86
Broker-Dealer 1 10/21/22 $250,000 $2,003.37
Broker-Dealer 1 11/10/22 $250,000 $3,492.70
Broker-Dealer 1 11/10/22 $250,000 $3,492.70
Broker-Dealer 1 11/14/22 $250,000 $3,492.70
Broker-Dealer 1 11/14/22 $250,000 $3,492.70
Broker-Dealer 1 11/14/22 $250,000 $3,492.70
Broker-Dealer 1 11/14/22 $250,000 $3,492.70
Broker-Dealer 1 11/14/22 $250,000 $3,492.70
Broker-Dealer 1 11/14/22 $250,000 $3,492.70
Broker-Dealer 1 11/15/22 $250,000 $3,492.70
Broker-Dealer 1 11/15/22 $250,000 $3,492.70
Broker-Dealer 1 11/17/22 $100,000 $44,194.17
Broker-Dealer 1 11/17/22 $200,000 $44,194.17
Broker-Dealer 1 11/17/22 $100,000 $44,194.17
Total Broker-Dealer 1  $3,600,000

Broker-Dealer 2 11/29/22 $20,000 $13,972.94
Total Broker-Dealer 2  $20,000

Broker-Dealer 3 12/1/22 $2,000,000 $100
Broker-Dealer 3 12/1/22 $400,000 $100
Broker-Dealer 3 12/2/22 $600,000 $0
Total Broker-Dealer 3  $3,000,000

Broker-Dealer 4 1/27/23 $30,000 $809.51
Broker-Dealer 4 1/30/23 $250,000 $4,814.29
Total Broker-Dealer 4  $280,000

Total All Broker-
Dealers
 $6,900,000

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51. Broker-Dealers 1, 3, and 4 were left with negative account balances, and thus
losses, as a result of Komarow’s free-riding scheme. These negative balances totaled at least
$3,352,407.
52. In addition to causing losses to Brokers-Dealers 1, 3 and 4 as part of his
fraudulent scheme, Komarow withdrew $615,031 in trading profits to which he was not entitled
because he earned those proceeds from trades that he did not have the money to make.
53. At all times in the Relevant Period when placing the trades referenced above,
Komarow knew, or was reckless in not knowing, that the deposits he had purported to make were
insufficient to cover the costs of the trades he placed.
COUNT 1 – FRAUD BY DEFENDANT KOMAROW
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]

54. Paragraphs 1 through 53 are hereby realleged and are incorporated herein by
reference.
55. By reason of the conduct described above, Defendant Komarow, directly or
indirectly, in connection with the purchase and sale of securities, by the use of the means or
instrumentalities of interstate commerce or by use of the mails, intentionally, knowingly or
recklessly:
a. Employed devices, schemes, or artifices to defraud;
b. Made untrue statements of material fact and 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 operated or would
operate as a fraud and deceit upon any persons, including purchasers or sellers of such securities.

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56. By reason of the foregoing, Defendant Komarow 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].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully prays that the Court:
 A. Enter a permanent injunction enjoining Defendant Komarow, and his agents,
servants, employees, attorneys, and all persons in active concern or participation with them who
receive actual notice of the order by personal service or otherwise, including facsimile
transmission, email or overnight delivery service, from violating 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].
 B. Issue an order, pursuant to Sections 21(d)(1) and/or 21(d)(5) of the Exchange Act
[15 U.S.C. §78u(d)  (1), (3)], that permanently enjoins Defendant Komarow from: (a) directly or
indirectly, trading securities in any brokerage account he owns, controls, or has access to that
does not have 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.
 C. Issue an order, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C.
§78u(d)(2)], that Defendant Komarow be prohibited from acting as an officer or director of any
public company.
 D. Require Defendant Komarow to disgorge all ill-gotten gains he received as a
result of his violation of the federal securities laws, plus pre-judgment interest thereon;

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 E. Require Defendant Komarow to pay a civil monetary penalty pursuant to Section
21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)].
 F. Retain jurisdiction over this action to implement and carry out the terms of all
orders and decrees that may be entered or to entertain any suitable application or motion by the
Commission for additional relief within the jurisdiction of this Court.
 G. Grant such other and further relief as this Court may deem just, equitable, and
appropriate.
JURY DEMAND
 The Commission hereby demands a trial by jury on all claims so triable.
Dated:  December 8, 2023   Respectfully Submitted,
      SECURITIES AND EXCHANGE COMMISSION
      By its attorneys,
 /s/ Kathleen B. Shields___________________
 Kathleen B. Shields (Mass. Bar No. 637438)
 Cassandra H. Arriaza (Mass. Bar No. 669806)
 David R. Fox (Virginia Bar No. 93500)
 Boston Regional Office
 33 Arch Street, 24th Floor
 Boston, MA 02110
 [email protected]
 Shields phone: (617) 573-8904
 Facsimile: (617) 573-4590

 Local Counsel:
 /s/ David C. Nelson______________________
 David C. Nelson
 Assistant United States Attorney
 United States Attorney’s Office
 District of Connecticut
 157 Church Street
 New Haven, CT 06510
 (203) 821-3700
 [email protected]

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UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF CONNECTICUT 

 
 
  
SECURITIES AND EXCHANGE COMMISSION,  
  

Plaintiff,  
 C.A. No. ______  

v.  
  
ANDREW M. KOMAROW, JURY TRIAL DEMANDED 
  

Defendant.  
  

 
 

COMPLAINT 
 
 Plaintiff Securities and Exchange Commission (“Commission”) alleges as follows against 

Defendant Andrew M. Komarow (“Komarow” or “Defendant”) and hereby demands a jury trial. 

SUMMARY 

1. This action involves a $6.9 million “free-riding” securities trading scheme 

perpetrated by Komarow. 

2. “Free-riding” is a fraudulent practice used by securities traders who seek to 

exploit the “immediate access” credit extended by certain broker-dealers in advance of incoming 

deposits of cash from bank accounts. 

3.  By seeking to transfer funds into his brokerage accounts from his bank accounts 

that he knew lacked sufficient funds to cover the transfers, Komarow exploited the “immediate 

access” credit extended by certain broker-dealers to buy and sell securities. Generally, immediate 

access at certain broker-dealers means that those broker-dealers will allow a customer to begin 

using deposited money immediately to place trades before the customer’s check or electronic 

transfer from another financial account into their brokerage account has actually cleared.  

Case 3:23-cv-01599   Document 1   Filed 12/08/23   Page 1 of 14



 

 
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Komarow carried out his scheme by trading in his brokerage account during the “immediate 

access” period when he knew he had insufficient funds in his bank account to cover the transfer 

into his brokerage account, and thus his brokerage account would never get the money to cover 

his trading activity.  He attempted to earn and withdraw trading profits from his brokerage 

accounts before the broker-dealers were notified of the insufficient funds in his associated bank 

accounts and froze his brokerage accounts. 

4. Specifically, between October 13, 2022 and January 30, 2023, (the “Relevant 

Period”), Komarow engaged in a free-riding scheme using his brokerage accounts at four 

different broker-dealers. 

5. During the Relevant Period, Komarow knowingly, or at least recklessly, requested 

$6.9 million in deposits into 11 of his brokerage accounts at 4 broker-dealers, which were later 

reversed due to insufficient funds in the bank accounts from which he sought to transfer those 

funds.  Before those fund transfers were reversed, Komarow was permitted by the broker-dealers 

to use some of those funds during the “immediate access” period to engage in speculative 

securities trading. 

6. As a result of his speculative securities trades, Komarow made at least $615,031 

in profits.  Komarow withdrew those profits from his brokerage accounts at one broker-dealer. 

7. Komarow’s scheme left the four broker-dealers holding his brokerage accounts 

with losses totaling at least $3,352,407. 

8. In addition, to open at least one of his brokerage accounts, Komarow made 

material misrepresentations in his brokerage account opening documents and deceptively used 

the access credentials (including username and password) of others to access the brokerage 

firm’s online account systems. 

Case 3:23-cv-01599   Document 1   Filed 12/08/23   Page 2 of 14



 

 
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9. By this conduct, Komarow violated, and unless enjoined will continue to violate, 

Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §78j(b)] and 

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

10. As the result of Komarow’s violation, the Commission seeks permanent 

injunctive relief, a conduct-based injunction, an officer and director bar, disgorgement with 

prejudgment interest, and civil penalties against Komarow. 

JURISDICTION AND VENUE 

11. 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]. 

12. The Defendant, directly or indirectly, made use of the mails, or the means or 

instrumentalities of transportation or communication in interstate commerce in connection with 

the transactions, acts, practices, and courses of business alleged in this Complaint. 

13. Venue is proper in this district pursuant to Section 27 of the Exchange Act [15 

U.S.C. §78aa] because Komarow resides in Connecticut and certain of the transactions, acts, 

practices and courses of conduct constituting violations of the federal securities laws occurred 

within this district. 

THE DEFENDANT 

14. Andrew M. Komarow, age 34, is a resident of Avon, Connecticut. From 2010 

through the Relevant Period, Komarow was associated with a broker-dealer firm as a general 

securities principal and was associated with an investment advisory firm as an investment 

adviser representative. Komarow held multiple licenses issued by the Financial Industry 

Regulatory Association, including Series 6, Series 7, Series 63, and Series 65 licenses at various 

times. 

Case 3:23-cv-01599   Document 1   Filed 12/08/23   Page 3 of 14



 

 
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FACTS 

Komarow’s Free-Riding at Broker-Dealer 1  

15. Komarow opened a brokerage account with Broker-Dealer 1 in March 2013. On 

October 13, 2022, Komarow knowingly, or at least recklessly, made a $200,000 automated 

clearinghouse (or “ACH,” a system of transferring funds electronically between financial 

institutions or accounts) deposit into his brokerage account at Broker-Dealer 1 from a bank 

account at Bank A that had less than $60,000 at the time of the requested transfer. Rather than 

waiting for the ACH transfer to clear, Broker-Dealer 1 allowed Komarow immediate access to 

the purportedly transferred funds to engage in securities trading.  Komarow used that immediate 

access allowed by Broker-Dealer 1 to make a large number of high-risk trades intended to yield 

an immediate payoff in his brokerage account. Days later the ACH transfer was rejected for 

insufficient funds and reversed from Komarow’s brokerage account at Broker-Dealer 1. 

16. Komarow knowingly, or at least recklessly, made three additional ACH transfers 

from his bank account at Bank A to his brokerage account at Broker-Dealer 1 on October 20 and 

21, 2022, totaling $500,000. He again took advantage of the immediate access to those funds 

provided by Broker-Dealer 1 to make high-risk trades. Bank A later rejected these three 

requested ACH transfers for insufficient funds, as Komarow’s Bank A account had less than 

$3,000 at the time he initiated each of the ACH transfers. 

17. At the time he engaged in the above free-riding activity, Komarow was associated 

with an investment advisory firm (the “Investment Adviser”) as an investment adviser 

representative, where he managed clients’ investment accounts and offered his clients advice on 

their accounts.   

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18. On or about October 25, 2022, Broker-Dealer 1 notified the Investment Adviser 

that there were problems with Komarow’s personal brokerage account. The Investment Adviser 

learned that these problems included trades that were “not fully paid for.” Broker-Dealer 1 also 

put restrictions on Komarow’s brokerage account. 

19. Komarow made multiple calls to Broker-Dealer 1 on November 8, 2022 and 

persuaded Broker-Dealer 1 to restore his access to his brokerage account. Komarow had already 

opened a new brokerage account at Broker-Dealer 1 on October 30, 2022, and from November 

11 through November 14, 2022, Komarow opened six additional brokerage accounts at Broker-

Dealer 1. 

20. From November 10 through November 15, 2022, Komarow knowingly, or at least 

recklessly, made 10 ACH transfer requests totaling $2.5 million into all 8 of the brokerage 

accounts he had opened by November 14, 2022.  These ACH transfer requests, all for $250,000 

each, were all made from a bank account at Bank A that had less than $4,000 at the time of the 

requests. Komarow again used the immediate access to those funds provided by Broker-Dealer 1 

to make high risk trades. Bank A later rejected all 10 of Komarow’s ACH transfer requests for 

insufficient funds. 

21. On November 17, 2022, Komarow knowingly, or at least recklessly, made 3 ACH 

transfer requests totaling $400,000 from a second bank account at Bank A that had less than 

$45,000 at the time and again directed those funds to his brokerage accounts at Broker-Dealer 1.  

He again used those funds to execute high risk securities trades. Bank A later rejected all 3 of the 

ACH requests for insufficient funds. 

22. Due to Komarow’s continued free-riding activity, Broker-Dealer 1 restricted 

Komarow’s access to his brokerage accounts and also to the accounts of his advisory clients at 

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the Investment Adviser.  Broker-Dealer 1 expressed that Komarow’s activity violated trading 

rules.  

23. On the evening of November 17, 2022, Komarow was informed by the 

Investment Adviser that his employment was being terminated, effective immediately, due to the 

activity in his personal brokerage account at Broker-Dealer 1. Not only were Komarow’s trades 

high-risk, but his activity in his personal brokerage account at Broker-Dealer 1 also adversely 

impacted his advisory clients at the Investment Adviser because Broker-Dealer 1 prevented 

Komarow from accessing any of his advisory client accounts that were held at Broker-Dealer 1. 

24. From October 14, 2022 through November 15, 2022, Komarow withdrew at least 

$615,031 in profits from his brokerage accounts at Broker-Dealer 1. 

25. Combined, Komarow’s 8 brokerage accounts with Broker-Dealer 1 had negative 

account balances totaling $264,656 when they were restricted.  Komarow’s conduct thus caused 

Broker-Dealer 1 to incur losses of at least $264,656. 

Komarow’s Attempted Free-Riding at Broker-Dealer 2 

26. Komarow had a brokerage account with Broker-Dealer 2, which he opened in 

January 2017.  

27. On November 29, 2022, Komarow requested an ACH transfer of $20,000 to his 

brokerage account at Broker-Dealer 2 from Bank B, where he had less than $14,000 in his bank 

account. 

28. Broker-Dealer 2 did not give Komarow immediate access to the funds Komarow 

had attempted to deposit, but instead put the deposit on hold until December 5, 2022. 

29. Bank B rejected Komarow’s ACH transfer request for insufficient funds on 

December 3, 2022. 

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30. Komarow was not able to make any securities trades using his attempted ACH 

deposit at Broker-Dealer 2. 

 
Komarow’s Free-Riding at Broker-Dealer 3 

31. Komarow had been associated with Broker-Dealer 3 as a general securities 

principal since April 2016. As a general securities principal, Komarow was permitted to buy and 

sell securities for his brokerage customers through Broker-Dealer 3, where he was also 

authorized to supervise other Broker-Dealer 3 representatives.  

32. On November 21, 2022, as a result of his activity at Broker-Dealer 1 and his 

termination from the Investment Adviser, Broker-Dealer 3 informed Komarow that if he did not 

find another investment adviser to work with in the next thirty days, his employment with 

Broker-Dealer 3 would also be terminated.   

33. On November 30, 2022, Komarow opened his own personal brokerage account at 

Broker-Dealer 3. The brokerage account opening documentation included a form allowing him 

to make ACH deposits and another form allowing him to make options trades. Options are a 

trading strategy that can be used for speculative, high-risk trading. Komarow opened his 

brokerage account and completed these forms online, using the access credentials of two of his 

firm’s employees.  

34. When opening his personal brokerage account at Broker-Dealer 3, Komarow 

falsely represented that his liquid net worth was over $1 million to obtain the ability to do 

options trading. In an “SWM Option Agreement and Disclosure Document,” which required its 

completion in full to allow options trading, Komarow selected the highest option for his liquid 

net worth in completing the form. Komarow electronically signed the form on November 30, 

2022. When signing, Komarow certified that the information in the form was “true and correct.” 

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Using the access credentials of one of his employees, he electronically signed the form with that 

employee’s name as well on November 30, 2022. 

35. Komarow made an initial $100 ACH deposit to his brokerage account at Broker-

Dealer 3 from his bank account at Bank B, for which he had available funds. On the next day, 

December 1, 2022, Komarow knowingly, or at least recklessly, requested a $400,000 ACH 

transfer and then knowingly, or at least recklessly, requested a separate $2 million ACH transfer 

from his bank account at Bank B to his new brokerage account at Broker-Dealer 3. Komarow’s 

bank account at Bank B had $100 in it at the time he requested these $2.4 million in transfers. 

Komarow took advantage of the fact that Broker-Dealer 3 would allow him immediate access to 

funds purportedly deposited through these ACH transfers by placing high-risk securities options 

trades intended to yield an immediate payoff in his brokerage account at Broker-Dealer 3. 

36. Broker-Dealer 3 attempted to contact Komarow regarding these trading activities 

on December 1, 2022. Komarow did not answer the calls from Broker-Dealer 3 personnel, but 

instead directed Employee A, a member of his staff who reported to Komarow and whose access 

credentials he had used to open the brokerage account, to speak to Broker-Dealer 3 personnel. 

37. Through electronic chats on the electronic communication platform known as 

Microsoft Teams, Komarow instructed Employee A to tell Broker-Dealer 3 personnel that she 

had initiated the trades Broker-Dealer 3 was calling about, when in fact Komarow had placed the 

trades using Employee A’s credentials. When Broker-Dealer 3 personnel asked if there was more 

money coming into the brokerage account, Komarow instructed Employee A to “say more than 

he needs, say 900k.” This message illustrates that Komarow was aware that the money to pay for 

these trades was not yet in Komarow’s brokerage account. 

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38. Later the same day, Komarow offered Employee A a monetary bonus to get 

Broker-Dealer 3 to execute the trades that Komarow had made with his purported ACH deposits.  

Komarow told Employee A via Microsoft Teams: “lie, whatever you have to do, to get those 

trades placed.” Although Broker-Dealer 3 personnel cancelled some of the trades Komarow had 

requested, many of Komarow’s trades were executed after Broker-Dealer 3 personnel spoke to 

Employee A. 

39. The next day, December 2, 2022, Komarow knowingly, or at least recklessly, 

requested a $600,000 ACH transfer from his bank account at Bank B, which had a $0 balance at 

the time, to his brokerage account at Broker-Dealer 3. Komarow again used the immediate 

access that Broker-Dealer 3 provided to those funds to make high risk securities trades.  

40. All three of Komarow’s ACH transfer requests to Broker-Dealer 3, totaling $3 

million, were ultimately rejected by Bank B for insufficient funds. 

41. By December 5, 2022, Broker-Dealer 3 put restrictions on Komarow’s brokerage 

account. 

42. By December 5, 2022, Komarow’s brokerage account at Broker-Dealer 3 had a 

negative balance of $3,087,020. Komarow’s free-riding scheme thus left Broker-Dealer 3 to 

incur a loss of at least $3,087,020. 

43. On December 5, 2022, Broker-Dealer 3’s Compliance Department emailed 

Komarow. The Compliance Department gave Komarow “the opportunity to confirm” that he 

“knowingly submitted ACH instructions without the sufficient funds to cover the transactions 

that were ultimately placed in that account.” Komarow responded via email: “I don’t have the 

funds. I do not know what I was thinking when this happened.” 

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44. On December 6, 2022, Komarow was notified of the immediate termination of his 

employment from Broker-Dealer 3. 

Komarow’s Free-Riding at Broker-Dealer 4 

45. Komarow opened a brokerage account with Broker-Dealer 4 in September 2010. 

46. On January 27, 2023, Komarow knowingly, or at least recklessly, requested an 

ACH transfer of $30,000 to his brokerage account at Broker-Dealer 4 from his bank account at 

Bank B. At the time of his request, Komarow had less than $1,000 in available funds in his bank 

account at Bank B. Bank B rejected the transfer for insufficient funds. 

47. Before Bank B rejected the transfer, Komarow took advantage of the fact that 

Broker-Dealer 4 gave him immediate access to the funds he had purported to transfer to his 

brokerage account.  Komarow executed one large and unprofitable securities trade, which left a 

negative balance of $730 in his brokerage account at Broker-Dealer 4.  Komarow’s free-riding 

scheme thus left Broker-Dealer 4 to incur a loss of $730. 

48. On January 30, 2023, Komarow knowingly, or at least recklessly, requested an 

ACH transfer of $250,000 to his brokerage account at Broker-Dealer 4 from his bank account at 

Bank B. Komarow had less than $5,000 in his bank account at Bank B at the time he requested 

this transfer. 

49. Broker-Dealer 4 had placed restrictions on Komarow’s brokerage account after 

his previous deposit was rejected for insufficient funds, and Komarow was not able to make any 

trades using this purported $250,000 ACH deposit, which was ultimately rejected by Bank B for 

insufficient funds. 

*                                                         *                                                     * 

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50. In total during the Relevant Period, Komarow requested 23 ACH transfers 

totaling $6.9 million that were rejected by his banks for insufficient funds, as shown in the chart 

below: 

Institution Date of ACH Amount of ACH 
Available Bank 

Account Balance* 
*At beginning of day 

Broker-Dealer 1 10/13/22 $200,000 $57,492.08 
Broker-Dealer 1 10/20/22 $200,000 $874.86 
Broker-Dealer 1 10/20/22 $50,000 $874.86 
Broker-Dealer 1 10/21/22 $250,000 $2,003.37 
Broker-Dealer 1 11/10/22 $250,000 $3,492.70 
Broker-Dealer 1 11/10/22 $250,000 $3,492.70 
Broker-Dealer 1 11/14/22 $250,000 $3,492.70 
Broker-Dealer 1 11/14/22 $250,000 $3,492.70 
Broker-Dealer 1 11/14/22 $250,000 $3,492.70 
Broker-Dealer 1 11/14/22 $250,000 $3,492.70 
Broker-Dealer 1 11/14/22 $250,000 $3,492.70 
Broker-Dealer 1 11/14/22 $250,000 $3,492.70 
Broker-Dealer 1 11/15/22 $250,000 $3,492.70 
Broker-Dealer 1 11/15/22 $250,000 $3,492.70 
Broker-Dealer 1 11/17/22 $100,000 $44,194.17 
Broker-Dealer 1 11/17/22 $200,000 $44,194.17 
Broker-Dealer 1 11/17/22 $100,000 $44,194.17 

Total Broker-Dealer 1  $3,600,000  
    

Broker-Dealer 2 11/29/22 $20,000 $13,972.94 
Total Broker-Dealer 2  $20,000  

    
Broker-Dealer 3 12/1/22 $2,000,000 $100 
Broker-Dealer 3 12/1/22 $400,000 $100 
Broker-Dealer 3 12/2/22 $600,000 $0 

Total Broker-Dealer 3  $3,000,000  
    

Broker-Dealer 4 1/27/23 $30,000 $809.51 
Broker-Dealer 4 1/30/23 $250,000 $4,814.29 

Total Broker-Dealer 4  $280,000  
    

Total All Broker-
Dealers 

 $6,900,000  

 

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51. Broker-Dealers 1, 3, and 4 were left with negative account balances, and thus 

losses, as a result of Komarow’s free-riding scheme. These negative balances totaled at least 

$3,352,407. 

52. In addition to causing losses to Brokers-Dealers 1, 3 and 4 as part of his 

fraudulent scheme, Komarow withdrew $615,031 in trading profits to which he was not entitled 

because he earned those proceeds from trades that he did not have the money to make. 

53. At all times in the Relevant Period when placing the trades referenced above, 

Komarow knew, or was reckless in not knowing, that the deposits he had purported to make were 

insufficient to cover the costs of the trades he placed. 

COUNT 1 – FRAUD BY DEFENDANT KOMAROW 

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] 

 
54. Paragraphs 1 through 53 are hereby realleged and are incorporated herein by 

reference. 

55. By reason of the conduct described above, Defendant Komarow, directly or 

indirectly, in connection with the purchase and sale of securities, by the use of the means or 

instrumentalities of interstate commerce or by use of the mails, intentionally, knowingly or 

recklessly: 

a. Employed devices, schemes, or artifices to defraud; 

b. Made untrue statements of material fact and 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 operated or would 

operate as a fraud and deceit upon any persons, including purchasers or sellers of such securities. 

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56. By reason of the foregoing, Defendant Komarow 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]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully prays that the Court: 

 A. Enter a permanent injunction enjoining Defendant Komarow, and his agents, 

servants, employees, attorneys, and all persons in active concern or participation with them who 

receive actual notice of the order by personal service or otherwise, including facsimile 

transmission, email or overnight delivery service, from violating 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]. 

 B. Issue an order, pursuant to Sections 21(d)(1) and/or 21(d)(5) of the Exchange Act 

[15 U.S.C. §78u(d)(1), (3)], that permanently enjoins Defendant Komarow from: (a) directly or 

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

does not have 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. 

 C. Issue an order, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. 

§78u(d)(2)], that Defendant Komarow be prohibited from acting as an officer or director of any 

public company. 

 D. Require Defendant Komarow to disgorge all ill-gotten gains he received as a 

result of his violation of the federal securities laws, plus pre-judgment interest thereon; 

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 E. Require Defendant Komarow to pay a civil monetary penalty pursuant to Section 

21(d)(3) of the Exchange Act [15 U.S.C. §78u(d)(3)]. 

 F. Retain jurisdiction over this action to implement and carry out the terms of all 

orders and decrees that may be entered or to entertain any suitable application or motion by the 

Commission for additional relief within the jurisdiction of this Court. 

 G. Grant such other and further relief as this Court may deem just, equitable, and 

appropriate. 

JURY DEMAND 

 The Commission hereby demands a trial by jury on all claims so triable. 

Dated: December 8, 2023   Respectfully Submitted, 

      SECURITIES AND EXCHANGE COMMISSION 

      By its attorneys, 

 /s/ Kathleen B. Shields___________________   
 Kathleen B. Shields (Mass. Bar No. 637438)  
 Cassandra H. Arriaza (Mass. Bar No. 669806)  
 David R. Fox (Virginia Bar No. 93500)  
 Boston Regional Office  
 33 Arch Street, 24th Floor  
 Boston, MA 02110  
 [email protected] 
 Shields phone: (617) 573-8904  
 Facsimile: (617) 573-4590  
 
 Local Counsel:  
 /s/ David C. Nelson______________________  
 David C. Nelson  
 Assistant United States Attorney  
 United States Attorney’s Office  
 District of Connecticut  
 157 Church Street  
 New Haven, CT 06510  
 (203) 821-3700  
 [email protected] 

 

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