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By Richard Hill
A Utah broker-dealer failed to report suspicious transactions to federal regulators, the Securities and Exchange Commission said June 5 ( SEC v. Alpine Securities Corp. , S.D.N.Y., 7:17-cv-04179, 6/5/17 ).
Alpine Securities Corp. cleared transactions for microcap stocks that were used in manipulative schemes, the agency said. Allegedly, despite suspicions, Alpine “routinely and systematically” failed to file required suspicious activity reports (SARs) with the Treasury Department’s Financial Crimes Enforcement Network, the SEC said in a complaint filed in the U.S. District Court for the Southern District of New York. When it did file, it frequently omitted crucial information, including information about what made the transaction suspicious in the first place, the agency said.
Alpine “systematically omitted” crucial information that it was aware of from at least 1,950 SARs between May 2011 and December 2015, the SEC said.
Alpine’s counsel, Mark Smith, Smith Correll LLP, Los Angeles, didn’t return a call and an email seeking comment.
An SEC spokesman declined to comment on whether there are more AML cases in the pipeline.
The SEC appears to be using AML requirements as a means to combat fraud, William Donnelly, an attorney at Murphy & McGonigle, Washington, who represents broker-dealers and investment advisers, told Bloomberg BNA.
“This can be seen as consistent with the SEC’s ongoing effort to combat microcap fraud by focusing on gatekeepers like broker-dealers,” he said. “It’s a little bit of a back-door way of doing that. Because the ultimate perpetrators of these schemes are often pretty slippery and difficult to pin down, the commission focuses on gatekeepers over which it can exert more control.”
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