BD Fined for Failed AML Compliance
A broker-dealer was censured, fined $200,000, and ordered to hire an independent compliance consultant for failing to file Suspicious Activity Reports. The SEC argues that the firm should have further investigated millions of penny stock transactions whereby customers deposited large blocks of penny stocks, liquidated them, and transferred the cash proceeds. The SEC faults the BD for blindly accepting customer representations that the shares were exempt from registration under Rule 144. The firm’s policies and procedures required a reasonable investigation into money laundering red flags. The firm’s CCO has also been charged with wrongdoing.
OUR TAKE: Anti-Money Laundering compliance and the timely filing of SARs remain priority issues for both the SEC and FINRA. FinCEN may also weigh in with criminal penalties including huge fines and jail time.