New York-based Brown Brothers Harriman & Co. (BBH) consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that BBH allegedly failed to have an appropriate anti-money laundering (AML) program in place to monitor and detect suspicious penny stock transactions. FINRA’s findings also stated that BBH did not sufficiently investigate suspicious penny stock activity, which had allegedly been brought to the firm’s attention, nor did BBH fulfill its Suspicious Activity Report (SAR) requirements. Further, FINRA found that BBH’s supervisory system was inadequate and allowed for the distribution of unregistered securities. FINRA’s findings also included that the firm allegedly knew that customers were depositing and selling large blocks of penny stocks and failed to more closely scrutinize these transactions as potentially being red flags for illegal unregistered distribution.
Low-priced securities such as penny stocks are more susceptible to manipulation by fraudsters. Between 2009 and 2013, FINRA allegedly found that BBH executed or delivered securities involving 6 billion shares of penny stocks. Many of these transactions were alleged to involve undisclosed customers of foreign banks in known bank secrecy havens.
Former BBH Global AML Compliance Officer Harold Crawford was fined $25,000 and suspended for one month. BBH received a record-setting fine of $8 Million by FINRA for its AML violations which, according to FINRA Executive Vice President of Enforcement Brad Bennett, “is a reminder to firms of what can happen if they choose to engage in the penny stock liquidation business when they lack the ability to manage the risks involved.”
Brokerage firms must establish and implement a reasonable supervisory system to protect customers from stockbroker misconduct and to prevent unnecessary investment losses. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages in unsuitable, high-risk investments can bring forth claims to recover losses against broker-dealers like BBH, which should consistently oversee its sales activities in order to prevent the above described prohibited conduct.
Have you suffered losses in your Brown Brothers Harriman account due to your stockbroker’s misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against BBH stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.
Robert Wayne Pearce
Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $125 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.
Rate this Post
Loading...