TradeStation Securities
The findings stated that the firm’s AML program did not establish reasonable procedures for escalating potentially suspicious trading for AML review and the firm failed to escalate certain trading in order to assess whether a Suspicious Activity Report (SAR) should be filed. Firm analysts frequently closed alerts with no further action, but they did not always document their investigation or conclusion that the activity was not suspicious. Analysts also appropriately restricted or closed customer accounts, including for suspicious trading activity, but did not always document the reason for their actions.
The firm was made aware that it could enhance the foregoing components of its AML program as part of its annual AML independent testing. The independent testing reports recommended that the firm better document its process for escalating matters to the AML department and track subsequent AML investigations. However, the firm did not fully implement these recommendations until later.
The findings also stated that the firm did not establish reasonable WSPs in connection with the acceptance and resale of low-priced securities to achieve compliance with Section 5 of the Securities Act of 1933 (Securities Act). The WSPs did not describe all of the steps in the firm’s review, approval, and post-approval process, to address the firm’s review of the deposit and resale of low-priced securities to prevent the firm’s participation in an unregistered distribution of restricted securities.
In addition, the procedures did not designate individuals responsible for the various steps in the process and inaccurately stated that the compliance department had responsibility to ensure compliance with Section 5 of the Securities Act, when the responsibility had been transferred to the Trading Operations department.
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