In May 2013, the Financial Industry Regulatory Authority
(FINRA) fined three brokerage firms a total of $900,000 for failing to maintain
proper anti-money laundering (AML) programs designed to detect suspicious financial
transactions. The firms are Atlas One
Financial Group in Miami, Florida, Firstrade Securities in Flushing, New York,
and World Trade Financial in San Diego California.
AML requirements are important tools to protect investors
against a wide range of illicit activities.
According to FINRA, Atlas One repeatedly failed, over a period of
several years, to identify suspicious account activity or did not adequately
investigate numerous AML “red flags” involving a pattern of activity consisting
of the movement of millions of dollars through various questionable
accounts. With regard to Firstrade, FINRA
determined that the firm failed to implement an adequate AML program designed
to detect and prevent suspicious transactions including potential manipulative
trading in a variety of Chinese issuer stocks.
As for World Trade Financial, FINRA determined that the firm failed to
create supervisory procedures designed to monitor for unlawful transactions in
unregistered penny stocks.
FINRA’s actions should serve as important warnings to firms
to ensure that their AML are effectively designed and enforced to detect and
prevent illicit financial transactions.
Federal law requires financial institutions to adopt meaningful
protections against money laundering and other illegal activities, and such
procedures are necessary to guard against well-known fraudulent schemes that
are perpetrated against investors.
If you believe you have been the victim of securities fraud,
please contact Block & Landsman for a free, confidential consultation.
