The SEC has announced charges against OTC Link LLC, a New York-based broker-dealer, for failing to file Suspicious Activity Reports (SARs) for over three years. OTC Link has agreed to pay a $1.19 million penalty to settle the charges.
Background
Broker-dealers like OTC Link are required to file SARs to help detect potential securities law and money laundering violations. OTC Link operates three alternative trading system (ATS) platforms, which broker-dealers use to execute or facilitate thousands of daily transactions in over-the-counter (OTC) securities.
SEC Findings
The SEC’s order found that OTC Link failed to adopt or implement reasonably designed anti-money laundering (AML) policies and procedures to surveil transactions conducted through its ATSs for possible red flags of suspicious activity from March 2020 through May 2023. As a result, OTC Link did not file a single SAR during this period.
SEC Statement
“Broker-dealers are critical gatekeepers to the securities markets and must diligently monitor for suspicious transactions,” said Tejal D. Shah, Associate Regional Director of the SEC’s New York Regional Office. “When firms like OTC Link fail to file SARs, they deprive regulators and law enforcement of important information about suspicious activity.”
Penalty and Remedies
OTC Link has agreed to:
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Pay a $1.19 million penalty
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Accept a censure and cease-and-desist order
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Continue engagement of a compliance consultant to review and recommend changes to the firm’s AML policies and procedures
The SEC’s order also finds that OTC Link violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.
