SEC Press press_release 68 KB 4,897 chars

Christopher Flagg; Daquan Lloyd; Travis Treusch

summary

Christopher Flagg orchestrated a $2 million free-riding scheme using over 600 brokerage accounts to fraudulently generate profits by exploiting instant deposit credits, with Daquan Lloyd and Travis Treusch aiding by opening accounts and recruiting others, resulting in SEC consent judgments imposing disgorgement and permanent injunctions, all satisfied via parallel criminal restitution orders.

paragraph

Christopher Flagg, Daquan Lloyd, and Travis Treusch were charged by the SEC with participating in a $2 million free-riding scheme that exploited instant deposit credits in unfunded 'loser' accounts to fund trades in controlled 'winner' accounts, generating artificial profits at brokers' expense over four years using at least 600 accounts. Flagg was charged with direct violations of Section 10(b) and Rule 10b-5(a) and (c), as well as Section 20(b), while Lloyd and Treusch were charged with aiding and abetting those violations. Final consent judgments ordered Flagg to disgorge $56,390, Lloyd $376,050, and Treusch $50,000—each amount satisfied by parallel criminal restitution orders—and imposed conduct-based injunctions prohibiting new brokerage accounts without disclosing the SEC judgment, with durations of five years for Flagg and Lloyd and three years for Treusch.

narrative

Christopher Flagg, Daquan Lloyd, and Travis Treusch were involved in a sophisticated $2 million free-riding scheme that spanned four years and utilized over 600 brokerage accounts to fraudulently generate trading profits by exploiting instant deposit credits in unfunded 'loser' accounts to fund trades in controlled 'winner' accounts, effectively siphoning funds at the broker’s expense. Flagg acted as the principal orchestrator, directly violating Section 10(b) of the Securities Exchange Act and Rule 10b-5(a) and (c), and was additionally charged under Section 20(b) for acting through others, while Lloyd and Treusch aided and abetted the scheme by opening loser accounts in their names and recruiting others to do the same. The SEC obtained final consent judgments against all three, ordering disgorgement of $56,390 from Flagg, $376,050 from Lloyd, and $50,000 from Treusch, with all payments deemed satisfied by corresponding criminal restitution and forfeiture orders in parallel U.S. Attorney cases. Each defendant was permanently enjoined from future violations of federal securities antifraud laws and subject to conduct-based injunctions prohibiting them from opening new brokerage accounts without first providing the broker with a copy of the SEC complaint and judgment—Flagg and Lloyd for five years, Treusch for three. The SEC’s investigation, led by its New York Regional Office and Market Abuse Unit and supported by the U.S. Attorney’s Office and FBI, culminated in these civil resolutions alongside criminal proceedings. The scheme’s scale and duration underscored systemic vulnerabilities in broker deposit practices, prompting regulatory scrutiny and enforcement actions targeting coordinated account manipulation. This case exemplifies the SEC’s coordinated civil-criminal approach to dismantling complex market abuse schemes involving multiple actors and accounts.

Enriched metadata

Scheme: unregistered-securities (100%)
Court: Eastern District of New York
Outcome: charged · 2024-09-06
Disgorgement: $376,050

Classified unregistered-securities(confidence 100%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →

Extracted insights

Dollar amounts 7

$2.00M $2 million $1M–$10M
$376K $376,050 $100K–$1M
$56K $56,390 $10K–$100K
$50K $50,000 $10K–$100K
$37K $37,145 $10K–$100K
$6K $5,570 <$10K
$5K $4,939 <$10K

Entities 5

person christopher flagg
person daquan lloyd
agency Securities and Exchange Commission
person travis treusch
court united states district court for eastern district of new york

Triples 17

SEC obtained final consent judgments against Christopher Flagg, Daquan Lloyd, and Travis Treusch
Christopher Flagg, Daquan Lloyd, and Travis Treusch participated in $2 Million Free-Riding Scheme
SEC filed initial complaint against Christopher Flagg, Daquan Lloyd, and others on October 31, 2023
SEC filed related complaint against Travis Treusch on February 11, 2024
Defendants used at least 600 brokerage accounts to conduct fraudulent scheme
Daquan Lloyd and Travis Treusch aided and abetted Christopher Flagg and one other defendant
SEC charged Christopher Flagg with violations of Section 10(b) of Securities Exchange Act of 1934 and Rules 10b-5(a) and (c)
SEC charged Daquan Lloyd with aiding and abetting violations of Section 10(b) of Securities Exchange Act and Rules 10b-5(a) and (c)
SEC charged Travis Treusch with aiding and abetting violations of Section 10(b) of Securities Exchange Act and Rules 10b-5(a) and (c)
Court entered partial consent judgment as to Christopher Flagg on February 4, 2025
Court entered partial consent judgment as to Daquan Lloyd on September 6, 2024
Court entered partial consent judgment as to Travis Treusch on April 18, 2024
Christopher Flagg ordered liable for disgorgement of $56,390.00 and prejudgment interest of $5,570.00
Daquan Lloyd ordered liable for disgorgement of $376,050.00 and prejudgment interest of $37,145.75
Travis Treusch ordered to pay disgorgement of $50,000.00
Conduct-Based Injunction remains in effect for five years for Christopher Flagg and Daquan Lloyd
United States District Court for Eastern District of New York entered final consent judgments on April 27, 2026

View original SEC press releasesec.gov

Extracted body text (4,897c)

U.S. SECURITIES AND EXCHANGE COMMISSIONLitigation Release No. 26545 / April 30, 2026Securities and Exchange Commission v. Hernandez, No. 23-civ-08110 (E.D.N.Y. filed Oct. 31, 2023); Securities and Exchange Commission v. Treusch, No. 24-civ-01050 (E.D.N.Y. filed Feb. 11, 2024)SEC Obtains Final Consent Judgments as to Christopher Flagg, Daquan Lloyd, and Travis Treusch in Connection with Alleged “Free-Riding” SchemeOn April 27, 2026, the United States District Court for the Eastern District of New York entered final consent judgments as to defendants Christopher Flagg, Daquan Lloyd and Travis Treusch for their roles in an alleged $2 million “free-riding” scheme.The SEC filed an initial complaint against Flagg, Lloyd and others on October 31, 2023, and a related complaint against Treusch on February 11, 2024.The SEC’s complaints alleged that Flagg, Lloyd, Treusch and two others participated in a fraudulent free-riding schemewhereby they opened and used unfunded brokerage accounts (the loser accounts) to generate trading profits in other brokerage accounts that they also controlled (the winner accounts). The complaints further alleged that the defendants maintained the loser accounts at a broker that provided an instant deposit credit, which they used to fund trades at artificial prices and repeatedly generate trading profits. In doing so, the defendants allegedly transferred the credit provided by the broker from the loser accounts to the winner accounts, accumulating guaranteed profits at the broker’s expense. All told, over a four-year period, the defendants allegedly used at least 600 brokerage accounts to conduct the fraudulent scheme. Specifically, the complaints alleged that Lloyd and Treusch each aided and abetted Flagg and one other defendant who acted as principals in the scheme, by opening loser accounts in their own respective names and recruiting others to do the same for use in the scheme.The SEC charged Flagg with violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 10b-5(a) and (c) thereunder and further violating these provisions by acting through or by means of another person in violation of Exchange Act Section 20(b). The SEC charged Lloyd with aiding and abetting violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The SEC charged Treusch with aiding and abetting violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder.The Court entered partial consent judgments as to Flagg, Lloyd, and Treusch, on February 4, 2025, September 6, 2024, and April 18, 2024, respectively. The partial judgments permanently enjoined them from further violations of the antifraud provisions of the federal securities laws they were charged with violating and imposed a conduct-based injunction against each defendant prohibiting each from opening a brokerage account without first providing to the relevant brokerage firm(s) a copy of the SEC complaint and any judgment against him in this matter.The final consent judgment as to Flagg ordered him liable for disgorgement of $56,390.00 and prejudgment interest thereon of $5,570.00, payment of which is deemed satisfied by the orders of restitution and forfeiture entered against him in the parallel criminal action, United States v. Hernandez et al., 23 cr. 428 (E.D.N.Y.), and determined that the previously-entered conduct-based injunction against Flagg would remain in effect for a period of five years.The final consent judgment as to Lloyd ordered him liable for disgorgement of $376,050.00 and prejudgment interest thereon of $37,145.75, payment of which is deemed satisfied by the orders of restitution and forfeiture entered against him in United States v. Hernandez et al. and determined that the previously-entered conduct-based injunction against Lloyd would remain in effect for a period of five years.The final consent judgment as to Treusch ordered him to pay disgorgement of $50,000.00 and prejudgment interest thereon of $4,939.00, payment of which is deemed satisfied by the orders of restitution and forfeiture entered against him in the parallel criminal action, United States v. Treusch, 24 cr. 010 (E.D.N.Y.), and determined that the previously-entered conduct-based injunction against Treusch would remain in effect for a period of three years.The SEC’s investigation was conducted by Cynthia A. Matthews, David Austin, John Marino, Pat McCluskey, and Lindsay S. Moilanen of the SEC’s New York Regional Office and the Enforcement Division’s Market Abuse Unit, and was supervised by Joseph Sansone, Chief of the Market Abuse Unit. The SEC’s litigation is being led by Christopher J. Dunnigan, Ms. Matthews, and Ms. Moilanen, and is being supervised by Jack Kaufman. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the FBI.

OCR text (4,897c · plain-text · 99% conf)