The Financial Industry Regulatory Authority (Finra) announced a hearing panel has expelled Westlake Village, Calif.-based broker-dealer AIS Financial for failing to enforce anti-money laundering policies.
Finra says AIS ignored its anti-money laundering policies by ignoring prominent red flags and blatant suspicious activity between November 2005 and December 2007. The hearing panel found that AIS ignored suspicious activity by allowing its customers to liquidate billions of shares of penny stocks from numerous accounts, on which the firm received commissions. The panel also found AIS concealed the activity from regulatory authorities.
In one instance, Finra found that AIS failed to report suspicious activity in corporate accounts controlled by a Costa Rica-based money management firm. The owner of that firm had been the subject of SEC regulatory actions for securities fraud and for engaging in an Internet manipulative scheme. According to Finra, AIS allowed the firm to liquidated billions of shares of penny stocks of numerous issuers, generating more than $3 million in sales for its customers, and $53,000 in commissions for AIS.
Finra also found that AIS permitted similar activities from accounts controlled by a customer and his nephew with disciplinary histories and criminal indictments tied to organized crime and money laundering.
In a third instance, Finra found that AIS permitted approximately 20 customers to deposit and liquidate 65 million shares of low-priced and thinly traded Asia Global Holdings Corp. stock. The panel found that these transactions included suspicious new account forms for customers and liquidation activity that coincided with spikes in Asia Global trading volume. The activity generated sales of approximately $5.1 million for the customers and $243,304 in commissions for AIS.