The Securities and Exchange Commission today charged a New York City-based brokerage firm and its former anti-money laundering officer with securities violations regarding the unregistered sale of “hundreds of millions” of penny stock shares without adequate due diligence.
The brokerage, Windsor Street Capital, formerly named Meyers Associates, and anti-money laundering officer John D. Telfer allegedly failed to file suspicious activity reports, as is required under current securities rules, for at least $24.8 million in suspicious penny-stock sale transactions from June 2013 to the present.
Over that time period, the brokerage earned at least $493,000 in commissions and fees from the transactions, according to the SEC.
Mr. Telfer, as AML officer from November 2013 through September 2016, was responsible for monitoring transactions, and by failing in compliance he “aided and abetted” the misconduct, according to the SEC.
Neither Windsor Street Capital nor Mr. Telfer could immediately be reached for comment. The firm's lawyer, Robert Rabinowitz of law firm Becker & Poliakoff, also couldn't be reached.
The SEC also filed a separate complaint today against Raymond H. Barton and William G. Goode, two microcap stock brokers who conducted a multimillion-dollar “pump-and-dump” scheme triggering the alleged “suspicious transactions” that went unflagged by Meyers Associates.
Mr. Barton, Mr. Goode and an associate agreed to settle the charges, and are required to pay more than $8.7 million in disgorgement plus interest and penalties. They could not be reached for comment through their lawyer, Sam Lieberman of law firm Sadis & Goldberg.
''The SEC's Broker-Dealer Task Force AML initiative is focused precisely on the conduct charged against Meyers Associates, which we allege systematically flouted its obligations under the securities laws to report suspicious activity,” Andrew M. Calamari, director of the SEC's New York Regional Office, said.
''We allege that when other brokerage firms were rejecting similar deposits by Barton and Goode, Meyers Associates not only effectuated their illegal stock sales but then failed to report them as required by law,” Mr. Calamari added.
The matter pertaining to Meyers Associates and Mr. Telfer is scheduled for a public hearing before an administrative law judge.