Oppenheimer Holdings Inc. (OPY) will pay $1.4 million to settle a brokerage industry regulator’s claims that it had an inadequate anti-money laundering program and failed to detect and report suspicious penny stock transactions.
The company’s brokerage unit failed to identify as “red flags” sales of more than 1 billion shares of 20 low-priced, highly speculative unregistered securities from August 2008 to September 2010, the Financial Industry Regulatory Authority said in a statement today. The firm also failed to conduct adequate due diligence on a correspondent account of a broker in the Bahamas, Finra said.
“Broker-dealers area required by federal securities laws and Finra rules to monitor customers’ accounts so that those accounts are not used for illegal activities, such as money laundering and penny stock schemes that can cause considerable harm to investors,” Brad Bennett, enforcement chief for Washington-based Finra, said in a statement.
Oppenheimer said in an e-mailed statement that it has significantly tightened its policies relating to the sales of low-priced shares and enhanced its review of clients’ sales with respect to anti-money laundering oversight.
To contact the reporter on this story: Joshua Gallu in Washington at firstname.lastname@example.org