News
Penny Stock Trades Present Unusual Money Laundering Risks, Compliance Experts Say
By Brian Monroe
printPenny stocks, long associated with so-called pump-and-dump schemes aimed at defrauding investors, also pose a potential money laundering threat, banking and securities compliance consultants say. Fraud and associated money laundering involving penny stocks "are on the rise," said Darren Donovan, principal in the Boston office of KPMG LLP's forensic practice. "Regulators are now more concerned about it and see a healthy pipeline of these kinds of cases." Penny stocks generally trade on over the counter listing services that subject them to less-stringent listing requirements than shares that trade on the major exchanges. Shares trading on the Pink Sheets service, for...
TO READ THE FULL STORY
Related News
A recent regulatory penalty citing a Brown Brothers Harriman executive made a compliance director at Bank of America wonder about his future personal liability, attendees of a business forum heard Tuesday.
America's oldest private bank will pay $8 million to settle regulatory anti-money laundering violations, the largest such fine imposed by the Financial Industry Regulatory Authority.
Internet portals that facilitate crowd-sourced fundraising will need to spend tens of thousands of dollars to comply with anti-money laundering rules proposed by the U.S. regulator of broker-dealers, say industry consultants.
The nation's largest private securities regulator penalized Oppenheimer & Co. more than $1.4 million for violations related to penny stock trades, a fine that could spur smaller firms to review for similar problems.
U.S. financial institutions are taking a closer look at accounts held for stock brokers managing money on behalf of multiple parties in the wake of governmental warnings and sanctions-related settlements.
Changes to how and how often securities firms report suspicious activity are helping to clarify the scope of a long-familiar financial crime: microcap fraud.
U.S. law enforcement officials and regulators have queried the nation's financial intelligence unit about securities settlements that use the world's top financial messaging platform, according to the agency's director.
A New York brokerage firm violated the Bank Secrecy Act by failing to report suspicious activity related to a scheme to bilk third-party investors, securities regulators said Tuesday.
The effect of a planned whistleblower program expected to have an impact on anti-money laundering compliance departments will likely be mitigated by low funding and other issues, say consultants.
The largest nongovernmental regulator of U.S. securities firms has expelled a Westlake Village, CA-based company for failing to implement anti-money laundering controls, the organization said Monday.
The country's largest independent securities regulator fined Scottrade $600,000 Monday for alleged deficiencies in its anti-money laundering program, including the company's over reliance on a manual transaction auditing system.
Penalties issued by the Financial Industry Regulatory Agency for anti-money laundering violations are on course to outnumber similar fines levied by the self-regulatory organization in 2008, according to agency data.
Hedge fund manager Bernard Madoff pleaded guilty Thursday to bilking investors out of $65 billion and laundering the money as part of a Ponzi scheme that dwarfed similar swindles.
The Financial Industry Regulatory Authority fined a Michigan brokerage firm $225,000 for securities violations and poor anti-money laundering controls, the second such enforcement action against a broker this year.
The Bush administration has added six government agencies, including three financial regulators, to a federal task force charged with fighting mortgage and securities fraud, according to the U.S. Justice Department.
The investigation into a $50 billion securities fraud by a former chairman of the Nasdaq stock market may mean more scrutiny for banks that took him as a client, according to a financial investigator.
The Financial Industry Regulatory Authority, which oversees nearly 5,100 brokerage firms, and its predecessor organization, the National Association of Securities Dealers (NASD), have issued fines in 80 AML-related disciplinary actions against securities firms since 2005, including 16 this year.
Terrorists, once dependent on state sponsorship, are increasingly using front companies to invest in securities markets to finance their activities, according to U.S. government officials.
Roughly one-third of the 2,500 firms examined by the Securities and Exchange Commission failed to properly identify customers, report suspicious activity, or conduct tests for AML vulnerabilities. Nonetheless, brokers had fewer overall deficiencies in their AML programs in 2006 than last year.