Wall Street Broker AF&Co Settles for $300,000 with SEC over SAR filings

SEC hits Wall Street Firm AF&Co regarding failure to file Suspicious Activity Reports.

The U.S. Securities and Exchange Commission (SEC) just announced charges against Wall Street-based brokerage firm Albert Fried & Company (AF&Co) over failing to file Suspicious Activity Reports (SARs) for more than a five-year period, according to an official statement from the regulator.

The charges against AF&Co, based on an SEC investigation, found how the firm failed to file the required reports over the mentioned period even though there were numerous occasions that triggered the filing requirement based on red flags from client’s suspicious transactions.

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Brokerage firms must take their anti-money laundering responsibilities seriously so they can serve as a line of defense against misconduct and market risks

 

$300,000 penalty to settle

SAR filings are required as part of the firm’s obligations under Anti-Money Laundering (AML) compliance and related regulations and the SEC order said that AF&Co had violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8.

AF&Co agreed to pay a penalty of $300,000 to settle the charges without admitting or denying them, and has already taken remedial action to prevent future related violations, and the SEC noted its cooperated in a statement while emphasising the importance that firms adhere to related AML compliance.

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AML Compliance

“Albert Fried & Company ignored numerous instances when customer trading activity should have triggered the firm to file SARs. Brokerage firms must take their anti-money laundering responsibilities seriously so they can serve as a line of defense against misconduct and market risks,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement, commenting in a statement.

The SEC noted that clients had high-volume liquidations of low-priced securities (i.e. penny stocks), and traded in stocks issued by companies with delinquent regulatory filings or involved in questionable penny stock promotions.

In addition, the SEC noted that on more than one instance client trading exceeded 80% of a given securities overall market volume. Many forex brokers also need to file SARs depending on where and how they operate, including relevant jurisdictions and regulatory environments.

It’s not clear if the missed reports were due to inefficient compliance technology or other compliance shortfalls or both.

Nonetheless, as regulatory technology improves, such filings could be automatically created by firms based on triggers that detect related suspicious client behaviour that creates the need for the SAR filing. The news follows charges the SEC made against a Ponzi-scheme operator yesterday, which was detailed by Finance Magnates along with another SEC cases where an adviser delayed losses to allegedly charge incentive fees.

 

 

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