Day Trader Patel Charged $5M Market Manipulation from Puerto Rico
Summary
The SEC filed charges against day trader Harsh V. Patel in federal court in the Southern District of New York for an alleged market manipulation scheme conducted from San Juan, Puerto Rico. The complaint alleges Patel manipulated stock prices on more than a thousand occasions across hundreds of stocks from May 2021 to January 2024, generating more than $5 million in ill-gotten gains through a layered trading scheme involving small lot market orders, non-bona fide limit orders, and cancellation of buy orders after selling at inflated prices. The SEC charged Patel with violating Section 17(a) of the Securities Act of 1933, Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, seeking permanent injunctions, a conduct-based injunction, disgorgement with prejudgment interest, and a civil penalty.
“Patel conducted his manipulative trading scheme on more than a thousand occasions, trading in hundreds of different stocks from at least May 2021 to January 2024.”
The $5 million figure in this case represents alleged ill-gotten gains subject to disgorgement, not a specified civil penalty. Compliance programs should focus on the manipulation mechanics described: the use of small market orders to move prices, followed by large-lot sales at inflated prices, and cancellation of unfilled buy orders. This pattern is directly actionable under Section 9(a)(2) and Section 17(a). Firms with high-frequency or algorithmic trading should review their order-generation and cancellation logic to ensure no part of the workflow creates artificial price movement or false market signals.
What changed
The SEC's complaint describes an alleged manipulative trading scheme in which Patel placed small lot market orders to artificially inflate security prices, placed non-bona fide limit orders to create false indications of buying interest, sold the same securities in large lots at inflated prices, and then cancelled the buy limit orders. When broker-dealers restricted Patel's accounts, he allegedly opened accounts in another individual's name to continue the scheme. The SEC's investigation was conducted by the Division of Enforcement's Market Abuse Unit with assistance from FINRA.
Market participants with short-term trading strategies or algorithmic order-generation systems should treat this enforcement action as a reference point for compliance review. The specific conduct pattern—layered small-lot buying, non-bona fide limit orders, and post-sale cancellation of buy orders—represents the exact behavior the SEC charges under Section 9(a)(2) and Rule 10b-5. Firms should also scrutinize account-opening controls for patterns consistent with evasion of prior restrictions.
What to do next
- Review order-filling and cancellation practices for signs of wash trading or artificial price manipulation
- Audit account-opening procedures to detect attempts to evade trading restrictions
Archived snapshot
Apr 21, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
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Harsh V. Patel
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26532 / April 20, 2026
Securities and Exchange Commission v. Harsh V. Patel, No. 1:26-cv-03203 (S.D.N.Y. filed April 20, 2026)
SEC Charges Day Trader in Alleged Market Manipulation Scheme
On April 20, 2026, the Securities and Exchange Commission filed charges against Harsh V. Patel, for allegedly perpetrating a scheme from San Juan, Puerto Rico to manipulate stock prices that generated more than $5 million in ill-gotten gains.
According to the SEC’s complaint, Patel conducted his manipulative trading scheme on more than a thousand occasions, trading in hundreds of different stocks from at least May 2021 to January 2024. The complaint alleges that to carry out his scheme, Patel placed a large number of small lot market orders to purchase a security, which increased the price of the security in a matter of minutes. The complaint further alleges Patel then placed non-bona fide limit orders to buy that same security to falsely indicate to the market that there was additional buying interest in the security and to buoy the security’s price. According to the complaint, Patel then sold the same security that he had just acquired in a few large-lot market orders in order to sell the security at the now-inflated price. Finally, as alleged in the complaint, Patel then quickly cancelled the buy limit orders that he had placed. The SEC’s complaint also alleges that as broker-dealers discovered Patel’s manipulative trading and restricted and closed his accounts, Patel opened new brokerage accounts in the name of another individual to continue his scheme.
The SEC’s complaint, filed in federal court in the Southern District of New York, charges Patel with violating Section 17(a) of the Securities Act of 1933 and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks against Patel permanent injunctions, a conduct-based injunction, disgorgement with prejudgment interest, and a civil penalty.
The SEC’s investigation was conducted by Matthew Koop and Julia C. Green, with assistance of Han Nguyen, all of the Division of Enforcement’s Market Abuse Unit, under the supervision of Joseph G. Sansone, Chief of the Market Abuse Unit. The litigation will be handled by Karen M. Klotz and supervised by Gregory R. Bockin and Scott A. Thompson, Associate Director of the SEC’s Philadelphia Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
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