The Securities and Exchange Commission announced that three broker-dealers have been charged with deficiencies in filing suspicious activity reports.
The SEC said that the three, Webull Financial LLC, Lightspeed Financial Services Group LLC, and Paulson Investment Company, LLC, failed to include important, required information on the law enforcement suspicious activity reports (SARs) that they filed. The three broker-dealers agreed to pay $275,000 combined in civil penalties to settle the SEC’s charges.
Federal law requires broker-dealers to file SARs to report transactions that they have reason to suspect involve, among other things, funds derived from illegal activity or activity with no apparent lawful purpose. The SARs must contain “a clear, complete, and concise description of the activity, including what was unusual or irregular that caused suspicion.”
The SEC determined that each of the three broker-dealers filed multiple deficient SARs over a four-year period beginning in 2018.
“Suspicious activity reports play a vital role in keeping our markets safe, and the failure of broker-dealers to include necessary information to explain suspicious transactions deprives law enforcement and regulatory agencies of valuable and timely intelligence, undermining the very purpose of the SARs,” said Jason Burt, Director of the SEC’s Denver Regional Office. “Today’s cases reinforce the importance of complying with the applicable regulations and guidance surrounding the filing of SARs.”
The broker-dealers were found to have violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. The firms did not admit or deny the findings but agreed to be censured, cease and desist from violating the charged provisions, and pay civil penalties.
Webull Financial LLC and Paulson Investment Company, LLC also agreed to conduct a review of their anti-money-laundering programs by compliance consultants. The SEC said the resolutions reflect each of the firms’ cooperation after being contacted by Commission staff, as well as remedial measures taken by Lightspeed:
-Webull Financial LLC, of New York, N.Y., agreed to pay a $125,000 civil penalty.
-Lightspeed Financial Services Group LLC, of Morristown, N.J., agreed to pay a $75,000 civil penalty.
-Paulson Investment Company, LLC, of Lake Oswego, Ore., agreed to pay a $75,000 civil penalty.
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