SEC Charges Wilson-Davis & Co., Inc. with Failing to Report Suspicious Transactions
May 15, 2019
File No. 3-19167
May 15, 2019 - The Securities and Exchange Commission today announced that Wilson-Davis & Co., Inc., a Utah based brokerage firm, agreed to settle charges that it failed to monitor customers' trading for suspicious activity and failed to file Suspicious Activity Reports (SARs) on numerous transactions.
Broker-dealers are required to file SARs for certain transactions suspected to involve fraudulent activity or that have no business or apparent lawful purpose. The SEC's order found that from at least January 2013 through July 2017, Wilson-Davis failed to file SARs on suspicious transactions that raised red flags identified in the firm's AML policies and procedures. Primarily, Wilson-Davis failed to file SARs on hundreds of penny stock transactions where red flags indicated potential market manipulation or pump-and-dump activity. These transactions involved depositing physical stock certificates, the liquidation of those securities, and the immediate wiring of the proceeds out of the customer account.
The SEC's order finds that Wilson-Davis violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8, which requires broker-dealers registered with the Commission to comply with the reporting, record-keeping, and record retention requirements of the Bank Secrecy Act. Wilson-Davis agreed to pay a penalty of $300,000 and retain an Independent Compliance Consultant.