SEC Charges Brokerage Firm with AML Failures

The SEC charged a brokerage firm with failing to file Suspicious Activity Reports ("SARs") for more than a five year period when it "knew, suspected, or had reason to suspect" that certain transactions had been used to facilitate fraudulent activity or had no business or apparent lawful purpose.

SEC found that, in spite of adequate policies and procedures in place, the firm failed to file SARs tied to high-volume liquidations of low-priced securities executed by its customers. Among other instances, the SEC determined that the firm failed to "red flag"customer trading in: (i) a security on a given day exceeding 80% of the overall market volume; and (ii) stocks issued by companies that were delinquent in regulatory filings or involved in "questionable penny stock promotional campaigns."

The firm agreed to be censured and pay a $300,000 penalty.