Failure to Remedy Compliance Violations Costs International Bank
A large global bank admitted wrongdoing and agreed to pay a $1.6 Million penalty, in addition to $3.7 Million in disgorgement, for failing to stop its illegal practice of providing broker-dealer and investment adviser services to U.S. clients without registering. The SEC charges the firm with servicing high-net worth private clients by having relationship managers travel to the U.S. to meet with current and prospective clients and provide advice and brokerage services. In addition, the firm maintained brokerage accounts, executed orders, handled customer funds, and provided account statements. According to the SEC, the firm was aware that it was violating U.S. law as far back as 2008 and adopted policies and procedures, but failed to halt its violative conduct until at least 2013. The respondent also executed a Deferred Prosecution Agreement with the Justice Department for related conduct.
OUR TAKE: Compliance doesn’t stop at adopting policies and procedures. Firms must follow-through with implementation, especially after self-identifying legal violations. Merely “talking the talk” without “walking the walk” on compliance will result in a front-page enforcement action.