Penny Stocks have been a vehicle for criminal conduct for decades – from pump-and-dump schemes to more traditional money laundering. Yet firms are still being fined for failing to implement an AML program to detect and report potentially suspicious activity relating to low-priced securities.
Most recently a NY-based broker-dealer consented to a censure and $55k fine by FINRA for failing to detect or investigate red flags in accounts held by foreign financial institutions that deposited tens of millions of dollars’ worth of low-priced securities, liquidated the shares and withdrew the proceeds. And, yes, a key component of this firm’s surveillance program was the manual review of trade blotters by compliance staff and branch managers. If this hits a bit too close to home, you might consider exploring one of the many tools that can detect and prevent this activity. You can check out the consent order here.
