Electronic brokerage Interactive Brokers was hit with a class-action lawsuit Monday for allegedly aiding and abetting a $23 million Ponzi scheme.
According to the lawsuit, filed in the United States District Court for the Northern District of California, the firm recognized Haena Park's account was used to conduct a fraud, identifying her suspicious activity in reports reviewed by compliance analysts more than a dozen times during the life of the scheme.
Park, according to BrokerCheck, is a previously registered broker who also worked at Morgan Stanley and Goldman Sachs.
"Rather than scrutinize the activity, freeze the account, and report Park to the authorities, IB disregarded its own compliance department's red flags and written internal compliance policies to further aid Park, a lucrative IB customer, to continue the scheme through its brokerage services," the complaint states.
Through her Interactive Brokers' account, Park lost over $14 million of her investors' contributions before the scheme was discovered by regulators and Park was arrested, the complaint states. She was sentenced to three years in prison in 2018.
In 2020, IB's participation in the scheme came to light when the Securities and Exchange Commission, the Financial Industry Regulatory Authority and Commodity Futures Trading Commission "all simultaneously announced a joint action against IB for its role in the fraud and for other regulatory compliance violations," the suit states.
In August 2020, Interactive Brokers agreed to pay the SEC $38 million over repeated failures to file suspicious activity reports.
