BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Big Banks
- Regulatory Sanctions
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
AMLCO Flagged for Not Investigating Penny Stock Red Flags
Ronald Nicklas Jr., of Hayden Lake, ID, agreed to a $10K fine and a 4-month suspension in any principal capacity to settle FINRA charges that, as his member firm’s anti-money laundering compliance officer (AMLCO), he failed to implement an AML compliance program that was reasonably designed to detect and cause the timely reporting of suspicious activity.
BACKGROUND. Ronald Nicklas, Jr., entered the securities industry in June 1982, and from 1985 until his termination in 2015, he was associated with Pennaluna & Company. He’s currently not registered with any firm.
FACTS AND VIOLATIVE CONDUCT ACCORDING TO FINRA. Pennaluna’s AML Compliance Program described various red flags of potentially suspicious activity which, upon detection by firm personnel, would trigger further review by the AMLCO. Nicklas, himself, was also expected to independently detect the presence of any red flags by using exception reports. Once alerted to a red flag, Nicklas was required to decide whether further review or investigation was warranted.
Examples of red flags included, the following:
- Wire activity that is unexplained, repetitive, unusually large or shows unusual patterns or with no apparent business purposes;
- Customer has opened multiple accounts with the same beneficial owners or controlling parties for no apparent business reason;
- Customer transactions include a pattern ofreceiving stock in physical form or the incoming transfer of shares, selling the position and wiring out proceeds;
- Maintains multiple accounts, or maintains accounts in the names of family members or corporate entities with no apparent business or other purpose; and .
- The Company's stock is priced below a penny.
During the relevant period - from February 2010 through April 2012 - the firm accepted for deposit and subsequently facilitated the sale of millions of shares of low-priced securities. More specifically, 8 customer accounts at Pennaluna - 3 of which were controlled by the same individual - deposited approximately 225 million unregistered shares of 7 different, low-priced securities.
During the weeks and months following the deposits, these customers sold around 173 million of the deposited shares for proceeds totaling just over $1.5 million. Of the shares sold, ome 160 million of the shares were sold at prices of less than one penny. Sales of the deposited shares typically were followed by wire transfers of at least some portion of the proceeds to accounts outside of the firm without re-investment.
The deposits and rapid sales of unregistered, low-priced securities, as well as the subsequent wire transfers of proceeds after the sales, presented red flags that should have prompted Nicklas to conduct further investigation for potentially suspicious activity and to determine whether the filing of a suspicious activity report was necessary. Instead, Nicklas did not sufficiently investigate the red flags.
This case was reported in FINRA Disciplinary Actions for April 2017.
For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2012030446701.