Aegis Capital Corp. will pay $1.3 million in fines after admitting it failed to file suspicious activity reports on deals that should have set off red flags for potential money-laundering activity, regulators said.

The firm's founder, sole owner and CEO, Robert Eide, was blamed by the SEC for causing the violations by failing to respond to reports of the suspicious activity. He was fined $40,000.

The New York City-based brokerage firm "willfully violated" SEC reporting and record-keeping rules in failing to report the deals and has agreed to pay a $750,000 fine, the Securities and Exchange Commission said in a press release Wednesday. The firm has also agreed to retain a compliance expert, the SEC said.

Finra announced a separate settlement in the case in which Aegis agreed to pay $550,000.

In addition to Eide, two other Aegis employees had administrative charges filed against them by the SEC for allegedly being responsible for the disclosure violations.

"Aegis failed to meet its AML (anti-money laundering) obligations to report suspicious activity, including when it was faced with specific information alerting the firm to suspicious transactions,” said Antonia Chion, associate director and head of the SEC's Broker-Dealer Task Force.

Responding to the complaints, the company's attorney said clients were not impacted. 

“The referenced activity occurred more than four years ago, related to only seven (delivery-versus-payment) DVP accounts, and resulted in no harm to any Aegis clients," said Michael H. Ference, Aegis's attorney, in a prepared statement. "Aegis has long since exited this business line, and the brokers involved are no longer with the firm. Aegis is pleased to have satisfactorily resolved this legacy matter.”

The disclosure rules that Aegis violated are designed to detect suspicious security deals that could be an indication of money-laundering activity, according to Finra.

Aegis failed to file suspicious activity reports (SARs) on hundreds of low-priced security deals between 2012 and 2014 that "it knew, suspected, or had reason to suspect … involved the use of the broker-dealer to facilitate fraudulent activity or had no business or apparent lawful purpose," the SEC said in its complaint.

Among the reasons the deals were suspicious was that they were high-volume trades involving companies that showed little or no business activity, at a time the companies were being heavily promoted.

The company's trading surveillance system was flawed during the time in question, but even in cases where the system raised red flags on transactions, employees responsible for acting on the information failed to file the required reports, according to the SEC.

Finra also noted that Aegis failed to file SARs despite being alerted to the suspicious activity by its clearing firm.

Eide was cited by the SEC as having caused the violations by ignoring warnings about the trades. 

"Throughout the relevant period, Eide was alerted to at least some of these suspicious low-priced securities transactions as well, but he failed to take adequate steps to ensure that Aegis was filing the requisite SARs," the SEC said in a filing.

Kevin McKenna, formerly Aegis Capital's AML compliance officer, was found to have "aided and abetted" the firm's violations and agreed to pay a $20,000 fine. Under the agreement, he is prohibited from serving in a compliance or anti-money-laundering capacity in the securities industry, with a right to reapply, the SEC said.

Under the agreements, Eide and McKenna neither admitted nor denied the SEC allegations.

A third employee, Eugene Terracciano, a former Aegis Capital compliance officer, has been accused by the SEC of failing to file SARs on behalf of the company. His case is scheduled for an upcoming administrative hearing, according to the SEC.