SEC and FinCEN Charge Broker-Dealer Separately with Securities Law and BSA Violations Relating to Improper Penny Stock Sales

In separate actions, the SEC and the Financial Crimes Enforcement Network ("FinCEN") charged Oppenheimer & Co. ("Oppenheimer") with violating federal securities laws, as well as the Bank Secrecy Act ("BSA"), while selling penny stocks improperly in unregistered offerings on behalf of customers.

According to the SEC Order, Oppenheimer was involved in:

• aiding and abetting illegal activity by a customer;
• failing to file Suspicious Activity Reports to report the potential misconduct by the customer, and improperly recording the transactions in Oppenheimer's books and records;
• ignoring red flags that business was being conducted without an applicable exemption from the broker-dealer registration requirements of the federal securities laws; and
• engaging, on behalf of another customer, in the unregistered sales of billions of shares of penny stocks.

In a separate action, FinCEN assessed a civil monetary penalty against Oppenheimer for Bank Secrecy Act violations. According to FinCEN, Oppenheimer failed to (i) establish and implement an adequate anti-money laundering program, (ii) conduct adequate due diligence on a foreign correspondent account, and (iii) comply with requirements under Section 311 of the USA PATRIOT Act.

See: SEC Order; SEC Press Release. See also: AML Specialty Page (available to Cabinet subscribers only).