SEC v. Cyrus P. Naderi, No. LR-26418, Southern District of Texas (Nov. 18, 2025) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26418 / November 18, 2025 Securities and Exchange Commission v. Cyrus P. Naderi, No. 4:25-CV-03122 (S.D. Tex. filed July 3, 2025) SEC Obtains Final Judgment Against South Texas Trader for Fraudulent "Free-Riding" Scheme On October 7, 2025, the Securities and Exchange Commission obtained a final judgment against Cyrus P. Naderi of The Woodlands, Texas, for charges related to conducting a fraudulent "free-riding" scheme through which he attempted to profit by purchasing and selling stocks without having sufficient funds to pay for the trading. According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of Texas, from April 2021 through March 2024, Naderi initiated at least $565,000 of unfunded deposits into brokerage accounts he controlled at four different broker-dealers. The SEC alleges that the brokerage deposits were drawn against bank accounts that Naderi knew lacked sufficient funds to cover the deposits. The SEC further alleges that the broker-dealers, unaware that the deposits were unfunded, extended instant deposit credit, allowing Naderi to conduct trades in the accounts. Ultimately, as alleged, the deposits were reversed when the broker-dealers rejected them for insufficient funds, or when Naderi placed a stop-payment order on the transfer from his bank accounts. According to the complaint, before the reversals and stop-payment order, Naderi executed several hundred trades, buying and selling securities valued at more than $22.4 million, and causing three of the broker-dealers to incur an aggregate loss of at least $65,770. According to the complaint, after the fraudulent deposit at the fourth broker-dealer was reversed, Naderi’s trades were cancelled, preventing him from transferring out illicit trading profits. Without admitting or denying the allegations in the SEC’s complaint, Naderi consented to the entry of a final judgment, permanently enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment also imposes conduct based injunctions and orders Naderi to pay a $40,000 civil penalty. The investigation was conducted by Jeff Cohen, of the SEC’s Fort Worth Regional Office, under the supervision of Derek Kleinmann, with the assistance of Alex Lefferts of the SEC’s Office of Investigative and Market Analytics. The litigation was led by Matthew Gulde under the supervision of Keefe Bernstein.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26418 / November 18, 2025 Securities and Exchange Commission v. Cyrus P. Naderi, No. 4:25-CV-03122 (S.D. Tex. filed July 3, 2025) SEC Obtains Final Judgment Against South Texas Trader for Fraudulent "Free-Riding" Scheme On October 7, 2025, the Securities and Exchange Commission obtained a final judgment against Cyrus P. Naderi of The Woodlands, Texas, for charges related to conducting a fraudulent "free-riding" scheme through which he attempted to profit by purchasing and selling stocks without having sufficient funds to pay for the trading. According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of Texas, from April 2021 through March 2024, Naderi initiated at least $565,000 of unfunded deposits into brokerage accounts he controlled at four different broker-dealers. The SEC alleges that the brokerage deposits were drawn against bank accounts that Naderi knew lacked sufficient funds to cover the deposits. The SEC further alleges that the broker-dealers, unaware that the deposits were unfunded, extended instant deposit credit, allowing Naderi to conduct trades in the accounts. Ultimately, as alleged, the deposits were reversed when the broker-dealers rejected them for insufficient funds, or when Naderi placed a stop-payment order on the transfer from his bank accounts. According to the complaint, before the reversals and stop-payment order, Naderi executed several hundred trades, buying and selling securities valued at more than $22.4 million, and causing three of the broker-dealers to incur an aggregate loss of at least $65,770. According to the complaint, after the fraudulent deposit at the fourth broker-dealer was reversed, Naderi’s trades were cancelled, preventing him from transferring out illicit trading profits. Without admitting or denying the allegations in the SEC’s complaint, Naderi consented to the entry of a final judgment, permanently enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment also imposes conduct based injunctions and orders Naderi to pay a $40,000 civil penalty. The investigation was conducted by Jeff Cohen, of the SEC’s Fort Worth Regional Office, under the supervision of Derek Kleinmann, with the assistance of Alex Lefferts of the SEC’s Office of Investigative and Market Analytics. The litigation was led by Matthew Gulde under the supervision of Keefe Bernstein.