The US Financial Industry Regulatory Authority (FINRA) has imposed a penalty of $8m against New York-based investment bank and securities firm, Brown Brothers Harriman & Co (BBH) for substantial anti-money-laundering compliance failures.
The market regulatory agency said that the firm also failed to monitor and detect suspicious penny stock transactions and didn’t investigate the activity even when brought to its attention.
Furthermore, BBH did not fulfill its Suspicious Activity Report (SAR) filing requirements and failed to maintain an adequate supervisory system to prevent the distribution of unregistered securities.
BBH’s former Global AML compliance officer Harold Crawford was also fined $25,000 and suspended for one month.
During the investigation, FINRA found that from 1 January 2009 to 30 June 2013, BBH executed transactions or delivered securities involving at least six billion shares of penny stocks, which generated at least $850m in proceeds for its customers.
FINRA enforcement executive vice president Brad Bennett said that the sanction in this case reflects the gravity of Brown Brothers Harriman’s compliance failures.
"The firm opened its doors to undisclosed sellers of penny stocks from secrecy havens without regard for who was behind those transactions, or whether the stock was properly registered or exempt from registration," Bennett added.
BBH and Crawford, in concluding these settlements, neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.