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SEC charges brokerage firm with AML failures

Joe Mont | June 12, 2017

The Securities and Exchange Commission has charged a Salt Lake City-based brokerage firm with securities law violations related to its alleged practice of clearing transactions for microcap stocks that were used in manipulative schemes to harm investors.

To help detect potential securities law and money laundering violations, broker-dealers are required to file Suspicious Activity Reports that describe suspicious transactions that take place through their firms. The SEC’s complaint alleges that Alpine Securities Corporation routinely and systematically failed to file SARs for stock transactions that it flagged as suspicious. 

When it did file SARs, the firm allegedly and frequently omitted information that formed the bases for Alpine knowing, suspecting, or having reason to suspect that a transaction was suspicious. 

As noted in the complaint, guidance for preparing SARs from the U.S. Treasury Department’s Financial Crimes Enforcement Network clearly states that “explaining why the transaction is suspicious is critical.”

“As alleged in our complaint, by failing to file SARs, Alpine Securities deprived regulators and law enforcement of critically important information often related to trades in microcap securities used to investigate potentially serious misconduct,” Julie Lutz, director of the SEC’s Denver Regional Office, said in a statement.

The SEC’s complaint charges Alpine Securities with thousands of violations of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8.

The case involves the Enforcement Division’s Broker-Dealer Task Force, which focuses on current issues and practices within the broker-dealer community, developing national initiatives for potential investigations.