SEC v. Sang N. Phan and Rich N. Phan (free riding and parking, 2022)

Judgment entered

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In September 2022 the SEC sued brothers Sang and Rich Phan of Columbus, Georgia over an alleged free-riding scheme using brokerage accounts. After consent injunctions in December 2022, the Middle District of Georgia granted summary judgment on remedies on June 6, 2023: disgorgement of $12,830.36 and interest of $825.54 against Sang Phan, and a $25,000 penalty against each brother. The total civil penalties are $50,000.

The record

What was ordered

Civil penalty

$50k

Disgorgement

$12.8k

Prejudgment interest

$826

Total relief

$63.7k

Alleged gain

—

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The Securities and Exchange Commission announced on September 26, 2022 (litigation release 25522) a complaint in the Middle District of Georgia.

The SEC alleges that from at least February to May 2021 the Phans used falsified brokerage applications and bank accounts holding minimal funds to induce two broker-dealers to give instant deposit credits of more than $222,000 across four accounts, then bought securities planning to withdraw profits before the bogus deposits reversed. It says none of the trading was profitable: Sang Phan lost about $13,000 and a broker-dealer cancelled all of Rich Phan's trades after linking them to his brother's.

This library tags the matter as free riding because the conduct is trading on credit that was never funded. The case was pending at the date of the release.

Outcome. Both brothers consented, by orders entered December 29, 2022, to permanent injunctions under Section 10(b) and Rule 10b-5 with money left open. On June 6, 2023 the court (M.D. Ga. No. 4:22-cv-149, docket entry 15) granted the SEC's motion for summary judgment on remedies, entered final judgment, and ordered Sang Phan to pay disgorgement of $12,830.36 and prejudgment interest of $825.54 (total $13,655.90) and each brother to pay a civil penalty of $25,000. The order summarises the SEC's undisputed facts: roughly $222,700 of bogus deposits into accounts opened with inflated net-worth statements and none of the trading profitable. No bar is stated in the portions I read.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the release.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Free riding and parking — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2022-09-26 Litigation release published
2. 2022-12-29 Consent injunctions entered against Sang and Rich Phan
3. 2023-06-06 Summary judgment on remedies: final judgment, disgorgement and civil penalties

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEC litigation release
• Order granting SEC summary judgment and entering final judgment (M.D. Ga.)
• Permanent injunction as to Sang Phan (M.D. Ga.)

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added September 10, 2026. submit a correction.