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NEWSLETTERS & ALERTS
SEC Fines ICBCFS and Chardan, Bars CCO/AMLCO, Over AML Violations
by Howard Haykin
On the heels of its FINRA settlement (a $5.3Mn fine) [see Financialish], Industrial and Commercial Bank of China Financial Services (“ICBCFS”) has agreed to pay an $860K fine to settle SEC charges that it failed to report suspicious sales of billions of penny stock shares.
In related actions, one of ICBCFS's introducing brokers, Chardan Capital Markets, and Chardan's CCO/AML Officer, Jerard Basmagy, agreed to settle similar charges with the SEC.
- Chardan will pay a $1 million fine, retain an independant consult and make numerous personnel moves.
- Basmagy will pay a $15K fine and be barred from the industry for at least 3 years.
[above cases to be detailed in a separate postings]
SEC FINDINGS. From October 2013 to June 2014, Chardan, an introducing broker, liquidated more than 12.5 billion penny stock shares for 7 of its customers and ICBCFS cleared the transactions. Chardan failed to file any SARs even though the transactions raised red flags, including similar trading patterns and sales in issuers who lacked revenues and products. ICBCFS similarly failed to file any SARs for the transactions despite ultimately prohibiting trading in penny stocks by some of the 7 customers.
Broker-dealers are required to file Suspicious Activity Reports ("SARs") for transactions suspected to involve fraud or with no apparent lawful purpose.
For his part, Jerard Basmagy, Chardan’s Chief Compliance Officer and Anti-Money Laundering (AML) Officer, aided and abetted and caused that firm’s violations.
For further details, click on the SEC Order pertaining to: