Chadd L. Evans

The Securities and Exchange Commission today announced that it charged Chadd L. Evans of Fincastle, Virginia, with conducting a fraudulent "free-riding" scheme in which he attempted to profit by purchasing and selling stocks without paying for them.

The SEC's complaint states that, from July 2020 to October 2020, Evans engaged in a pattern of making bogus transfers of money from various under-funded bank and brokerage accounts to new accounts at other broker-dealers, knowing that he did not have sufficient funds to cover the transfers. The complaint further alleges that Evans immediately began trading securities in the newly opened brokerage accounts using funds the brokerage firms made temporarily available while the fraudulent transfers were pending. When those transfers did not materialize, the brokerages were left with trading losses. According to the complaint, Evans perpetrated this scheme at a series of five brokerage firms, made false deposits totaling over $280,000, and placed nearly $1 million in trades. Evans's trading was not profitable, leaving the brokers with the losses he incurred on those trades.

Evans, without admitting or denying the allegations in the SEC's complaint, consented to the entry of a final judgment, subject to court approval, which would permanently enjoin him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment would also enjoin Evans from opening any brokerage account without first providing the brokerage firm with a copy of the SEC's complaint and final judgment in this matter, and would require that he pay a $10,000 civil penalty.

The SEC's investigation was conducted by Jack Easton under the supervision of Kingdon Kase and Scott A. Thompson, with the assistance of trial counsel Judson Mihok under the supervision of Gregory Bockin.