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.
