TD Ameritrade fined $500,000 for failing to report advisers' suspicious activities

TD Ameritrade fined $500,000 for failing to report advisers' suspicious activities
Activities cited include suspicious trading, questionable transfers, and potentially false and misleading statements.
SEP 24, 2018

The Securities and Exchange Commission fined TD Ameritrade Inc. $500,000 on Monday for failing to file certain required suspicious activity reports after the firm halted business with 111 independent investment advisers. Broker-dealers such as TD Ameritrade are required to comply with the Bank Secrecy Act and file such suspicious activity reports, according to the SEC. "From 2013 to September 2015, [TD Ameritrade] terminated its business relationship with 111 independent investment advisers that [TD Ameritrade] determined presented an unacceptable business, credit, operational, reputational or regulatory risk to [TD Ameritrade] or its customers," according to the SEC, which added that none of the advisers were employed by the firm. "Although it filed a number of [suspicious activity reports] relating to suspicious transactions of certain terminated advisers, [TD Ameritrade] failed to file [reports] on the suspicious transactions of a number of other terminated advisers," according to the SEC. The firm's "failure to file the [reports] resulted from its failure, at the time, to consistently and appropriately refer terminated advisers and their possibly suspicious transactions to the firm's anti-money-laundering department" in violation of SEC rules. Activities of the advisers in question, according to the SEC, included: suspicious securities trading, such as advisers who apparently engaged in trades to improperly shift losses on trade errors to clients; questionable transfers to the adviser or entities affiliated with the adviser; and managing client assets at TD Ameritrade while the adviser was making potentially material false and misleading statements to a client. TD Ameritrade neither admitted to nor denied the SEC's findings in the matter. "We fully cooperated with the SEC and agreed to a settlement without admitting or denying the allegations," Joseph Giannone, a company spokesman, wrote in an email. "We're pleased to put this matter behind us. Beyond that, we don't comment on regulatory actions." Last year, the SEC fined Wells Fargo Advisors $3.5 million to settle charges that it failed to file, or file in a timely manner, at least 50 suspicious activity reports, 45 of which related to continuing activity, approximately between March 2012 and June 2013.

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