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Financial Services Law Insights and Observations

FINRA fines broker dealer for AML failures

Federal Issues Financial Crimes FINRA Enforcement Anti-Money Laundering Compliance Securities Exchange Act

Federal Issues

On September 9, FINRA settled charges with a broker dealer (respondent) for alleged failures in its anti-money laundering (AML) compliance program. According to the letter of acceptance, waiver, and consent, the respondent allegedly failed to, among other things: (i) establish a reasonably designed AML program; (ii) implement a customer identification program; (iii) reasonably supervise for potentially manipulative trading; and (iv) preserve and maintain certain electronic communications. Additionally, FINRA found that the respondent unreasonably relied on manual reviews of the daily trade blotter to identify market manipulation. FINRA’s order includes alleged violations of FINRA Rule 2010, Rule 3110, Rule 3310(a)-(b) and Rule 4511. FINRA also determined that the respondent violated Securities Exchange Act of 1934 Section 17(a) and Rule 17a-4(b)(4). The respondent agreed to pay a $450,000 civil monetary penalty to FINRA and is prohibited from providing market access for two years.

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