Corey Ortiz
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26626 / August 3, 2026
Securities and Exchange Commission v. Hernandez, No. 23-civ-08110 (E.D.N.Y. filed Oct. 31, 2023)
SEC Obtains Final Consent Judgment as to Corey Ortiz in Connection with Alleged “Free-Riding” Scheme
On August 25, 2026, the United States District Court for the Eastern District of New York entered a final consent judgment as to defendant Corey Ortiz for his role in an alleged $2 million “free-riding” scheme.
The SEC’s complaint, filed on October 31, 2023, alleged that Ortiz and three others participated in a fraudulent free-riding scheme whereby 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 complaint 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. According to the complaint, Ortiz’s role in the scheme was primarily recruiting individuals who would agree to open new loser accounts or provide access to existing brokerage accounts for a nominal sum.
The final judgment permanently enjoins Ortiz from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, orders him liable for disgorgement of $199,710 and prejudgment interest thereon of $19,727, 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 imposes a conduct-based injunction prohibiting Ortiz from opening a brokerage account without first providing to the relevant brokerage firm(s) a copy of the Commission’s filed complaint and the final judgment in this matter for a period of five 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 Division of Enforcement’s Market Abuse Unit, and was supervised by Joseph Sansone, Chief of the Market Abuse Unit. The SEC’s litigation was conducted by Christopher J. Dunnigan, Ms. Matthews, and Ms. Moilanen, and was 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.