Broker-Dealer Fined for Failure to File SARs
A dually-registered broker-dealer and investment adviser was fined by the SEC and FINRA (see here and here) for failing to file Suspicious Activity Reports ("SARs").The failure concerned the broker dealer's use of an improperly high dollar threshold for filing the reports.
In an Administrative Proceeding, the SEC stated that the broker-dealer used a $25,000 threshold, instead of the required $5,000 threshold to prompt the filing of an SAR. The SEC said that SARs were to be filed for "transactions suspected of using [the broker-dealer] to facilitate criminal activity where there was no substantial basis for identifying a suspect responsible for the suspected criminal activity" (e.g., forged checks, account intrusions, identity theft and/or phone and internet scams). The SEC concluded that the broker-dealer violated Exchange Act Section 17(a) ("Records and Reports") and Rule 17a-8 ("Financial recordkeeping and reporting of currency and foreign transactions").
To settle the charges, the broker-dealer agreed to (i) cease and desist from further regulatory violations, (ii) a censure and (iii) pay a civil monetary penalty to the SEC of $6,000,000.
In a Letter of Acceptance, Waiver and Consent, FINRA had substantially similar findings and concluded that the broker-dealer violated FINRA Rules 3310(a) ("Anti-Money Laundering Compliance Program") and 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the charges, the broker-dealer agreed to (i) a censure and (ii) pay an additional $6 million fine to FINRA.