BD to Pay $1.2M to Settle Reporting Charges
The firm didn't adopt adequate anti-money laundering policies or file one suspicious activity report for three years, the regulator says.
OTC Link LLC, a New York-based broker-dealer, has agreed to pay $1.19 million to settle charges it failed to file numerous reports of suspicious financial transactions over a three-year period, the Securities and Exchange Commission said Monday.
To help detect potential securities law and money-laundering violations, broker-dealers like OTC Link are required to file suspicious activity reports, or SARs, describing suspicious transactions conducted through their firms, the commission noted.
OTC Link operates three alternative trading systems for over-the-counter securities —OTC Link ATS, OTC Link ECN and OTC Link NQB — the SEC said.
Other broker-dealers use the three OTC Link trading systems daily to execute or facilitate tens of thousands of transactions in securities, many of which are considered microcap or penny stock securities, the SEC said in a release.
From March 2020 through May 2023, however, OTC Link failed to adopt or implement reasonably designed anti-money laundering policies and procedures to monitor transactions conducted through its systems for possible red flags of suspicious activity, the regulatory body said, and — as a result — did not file a single SAR over the three-year period .
“Broker-dealers are critical gatekeepers to the securities markets and must diligently monitor for suspicious transactions,” said Tejal D. Shah, the SEC New York regional office’s associate regional director. “When firms like OTC Link fail to file SARs, they deprive regulators and law enforcement of important information about suspicious activity.”
The SEC’s order finds that OTC Link violated the Securities Exchange Act of 1934.
Without admitting or denying the SEC’s findings, OTC Link agreed to a censure and a cease-and-desist order in addition to the $1.19 million penalty.
The SEC’s order also directs OTC Link to continue its engagement of a compliance consultant to review and recommend changes to the firm’s anti-money laundering policies and procedures.
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