A broker-dealer settled FINRA charges for alleged deficiencies in its anti-money laundering ("AML") compliance program in connection with penny stock transactions. The settlement also resolved charges concerning excessive markups.
Specifically, FINRA alleged that Spencer Edwards, Inc. ("SEI") did not implement necessary AML procedures to monitor proposed deposits of microcap securities for signs of potentially suspicious activity. Alleged violations by SEI included charging more than 5 percent of the principal amount of a stock transaction on more than 5,500 occasions between November 2014 and August 2015.
SEI agreed to (i) pay a $250,000 fine, (ii) pay $512,261 in restitution, and (iii) stop accepting deposits of stock certificates as well as liquidating previously deposited certificated securities.