Articles Tagged with AML

Chicago-based investor rights law firm Stoltmann Law Offices offers representation on a nationwide basis to investors that have been burned by brokerage firms like Interactive Brokers. Broker-dealers move a lot of money throughout the financial system. They make trades, do deals, and maintain custody of trillions of dollars for investors. Sometimes, though, their activities are unsavory. They may run afoul of money laundering laws, where cash is moved from one place to another to hide illegal activity.

The FBI has long suspected broker-dealers, private equity and hedge fund managers of moving money illicitly. In an investigative report made public earlier this year, the bureau highlighted “threat actors” in the money management industry who may be participating in illegal activity. The implications are far reaching, the report found:

“The FBI assumes threat actors exploit this vulnerability to integrate illicit proceeds into the licit global financial system. The FBI assesses, in the long term, criminally complicit investment fund managers likely will expand their money laundering operations as private placement opportunities increase, resulting in continued infiltration of the illicit global financial system.”

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) seem to be focusing recent efforts on governmentally sanctioning Chief Compliance Officers (CCOs) for compliance failures in the anti-corruption arena. Last year, the SEC issued two enforcement actions against CCOs in the financial services section, and this week, FINRA announced a disciplinary action against Linda Busby, former Raymond James CCO. As a result of the action, Busby agreed to leave the industry for three years and pay a fine of $25,000. She has been the CCO from 2002 until 2013. FINRA’s enforcement chief Brad Bennett said “Raymond James had significant systemic AML failures over an extended period of time, even when the firm was previously sanctioned in the area.

Garden State Securities has entered into a Letter of Acceptance, Wavier and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) and was censured and fined $15,000 for failing to execute orders fully and in a timely manner. Specifically, the firm did not do its due diligence on how favorably trades would perform before suggesting the best transactions with firm customers. Garden State also did not show the correct entry time on brokerage order memorandum. This is against FINRA rules. The fine was imposed in November 2013.

Also, in January 2013, Garden State was fined $5,000 for transmitting execution or combined order/execution reports to the Order Audit Trail System (OATS). Therefore, the OATS reporting system was unable to accurately relay information based off of the data it was given. Garden State also did not report their findings in a timely basis.

In 2012, Garden State was fine $265,000 and also entered into an Offer of Settlement with FINRA, saying that each of Garden State’s associated personnel must complete 16 hours of AML training, and the firm must review its supervisory system.

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