ViewTrade Securities, Inc.
The firm consented to the sanctions and to the entry of findings that it failed to establish and implement a written AML program reasonably expected to detect and cause the reporting of suspicious transactions. The findings stated that the firm’s written AML procedures assigned the responsibility for surveillance of potentially suspicious transactions to a designated principal and referenced the use of a daily transaction report, but it had no written procedures regarding the use of the report.
The firm did not have written procedures designating who was responsible for conducting the reviews of its surveillance system and reports generated from the system, their respective duties, what reports they would review, the factors they would consider when reviewing surveillance reports, how to document such reviews, when and how reviewing personnel would escalate an issue, or when and how the compliance and operations departments should share information from their reviews.
In addition, many of the firm’s surveillance reports were not reasonably designed to detect suspicious or potentially manipulative transactions.
The firm also lacked reasonable written AML procedures to detect and monitor for related customer accounts. The firm relied on customers to notify it that accounts were related and should be linked and had no system in place to monitor for red flags of purportedly unrelated customers using similar or near-identical email or mailing addresses.
In addition, the firm accepted and routed customer orders in options but did not have a reasonable system or any surveillance or other tools to detect and report suspicious or potentially manipulative activity specific to options transactions.
Furthermore, the firm did not develop and implement a reasonable system to review, identify, and report patterns of suspicious trading. Reviewers relied on their memory to recall if the same customers or securities appeared in multiple exceptions for two or more days and to review customer trades for anomalous trading patterns. The firm’s procedures also provided no guidance for documenting its analysis and investigation of suspicious activity and the firm did not document the findings of its investigations.
The findings also stated that the firm failed to timely or reasonably detect, investigate, and respond to red flags of suspicious activities by retail customers, including in IPOs where the firm served as an underwriter.
The firm conducted no review to compare customer trading activity or indications of interest to financial information on customer account forms. Multiple investors presented red flags of potential coordinated trading, but the firm failed to detect or perform any AML investigation of these transactions.
The firm also failed to detect, investigate, and respond to suspicious movements of money for customers.
The findings also included that the firm failed to establish, document, and maintain a system of risk management controls and supervisory procedures reasonably designed to manage the risks of its market access business.
The firm’s written procedures did not describe the firm’s processes to review, escalate, and resolve surveillance exceptions generated for potentially manipulative activity, and its process for generating and reviewing surveillance exceptions was not reasonably designed to identify various forms of suspicious or potentially manipulative trading
