The Securities and Exchange Commission has charged broker-dealer Oppenheimer & Co. (“Oppenheimer”) with two courses of misconduct relating to its customer, Gibraltar Global Securities (“Gibraltar”). Oppenheimer has admitted to the wrongdoing which resulted in a $10 million fine. Oppenhiemer was also fined $10 million by the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).
The SEC’s order instituting a settled administrative proceeding states the first course of misconduct involved Oppenheimer “aiding and abetting illegal activity by a customer and ignoring red flags that business was being conducted without an applicable exemption from the broker-dealer registration requirements of the federal securities laws.” Oppenheimer executed billions of shares of penny stocks for Girbraltar, a brokerage firm based in the Bahamas, which was not registered to conduct business in the United States. The SEC found that Oppenheimer failed to file Suspicious Activity Reports (“SARs”), violated tax laws and failed to recognize the resulting liabilities and expenses as part of their books and records requirements.
The second course of misconduct describes Opphenheimer engaged in the sale of unregistered penny stocks on behalf of another customer. The order also describes a failure to respond to red flags, questioning the exemption status of the sales along with a failure to reasonably supervise “with a view toward detecting and preventing violations of the registration provisions” on the part of Oppenheimer.
According to a FinCEN news release, Oppenheimer willfully violated the Bank Secrecy Act by failing to establish and implement an adequate anti-money laundering program, failing to conduct adequate due diligence on a foreign correspondent account, and not complying with requirements under Section 311 of the USA PATRIOT Act.
Andrew J. Ceresney, Director of the SEC’s Division of Enforcement stated that “These actions against Oppenheimer demonstrate that the SEC is fully committed to addressing lax AML compliance programs at broker-dealers through enforcement action. The sanctions imposed on Oppenheimer, which include admissions of wrongdoing and $20 million in monetary remedies, reflect the magnitude of Oppenheimer’s regulatory failures.”
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