By
Lisa M. Goolik, J.D.
Penny
stocks can add up—especially if you’re Oppenheimer & Co., Inc., a
securities broker-dealer based in New York. Oppenheimer is paying $20 million
to the Securities Exchange Commission and Treasury Department to settle charges
that it willfully violated securities laws and the Bank Secrecy Act while
dealing in penny stocks.
BSA
violations.
According to the Financial Crimes Enforcement Network's assessment, from 2008 through May
2014, Oppenheimer failed to detect and report suspicious activity related to
penny stocks, which typically are low-priced, thinly traded, and “highly
speculative securities” that can be vulnerable to manipulation. Oppenheimer
failed to report patterns of activity in which the customers deposited large
blocks of unregistered or illiquid penny stocks, moved large volumes of penny
stocks among accounts with no apparent purpose, or immediately liquidated those
securities and wired the proceeds out of the account.
SEC
violations.
Of the $20 million penalty, $10 million will be paid to the SEC to settle
charges that Oppenheimer violated the books and records and registration
provisions of the securities laws. The SEC found that between July 2008 and May
2009, Oppenheimer executed sales of billions of shares of penny stocks for an
account in the name of a customer that was acting as a broker in the U.S.,
despite not being registered with the Commission. In addition, Oppenheimer,
through a registered representative, engaged in the unregistered distribution
of the securities of six entities on behalf of a customer.
This
is also not the first time Oppenheimer has been in trouble. In 2005, FinCEN and
the New York Stock Exchange assessed a civil money penalty of $2.8 million
against Oppenheimer for similar violations. In 2013, the Financial Industry
Regulatory Authority fined the firm $1.4 million for violations of securities
laws and anti-money laundering failures.
For
more details about the action against Oppenheimer, subscribe to the Banking
and Finance Law Daily.
