FINRA's Department of Enforcement (the "Department") charged a broker-dealer and its founder with anti-money laundering ("AML") and supervisory failures related to microcap stock activities.
In a Complaint filed with FINRA's Office of Hearing Officers, the Department alleged that the broker-dealer, through its founder (who also held the positions of AML Compliance Officer, CEO and CCO), failed to establish and implement sufficient AML policies, procedures and supervisory systems for the depositing and trading of microcap stocks by its customers. The Department also alleged that the broker-dealer failed to comply with other AML requirements, including review, testing and training obligations. As a result of these failures, the broker-dealer allegedly allowed its account owners to partake in "millions of dollars of microcap stock deposit and trading" with accounts that were owned by individuals charged with prior regulatory violations and omnibus accounts established in foreign jurisdictions with "unknown beneficial owners." The broker-dealer allegedly earned approximately $1.6 million in commissions from the microcap stock activities of those accounts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.