Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, August 27, 2012

Why Did SEC Commissioner Aguilar Oppose Money Market Fund Reform?

Today's New York Times features a story on SEC Commissioner Luis Aguilar's decision to oppose SEC Chairman Schapiro's proposal to reform money market funds.  His was the swing vote on the 5-member Commission.  According to Aguilar, he objected to the approach taken by Schapiro and cited the need for additional information.  The Times reports that Aguilar has met frequently with industry representatives this year.  Aguilar also worked for the industry as an attorney from 1994-2002.  NYTimes, A Regulator’s Key Role in Failed Mutual Fund Reform

August 27, 2012 in Current Affairs, News Stories | Permalink | Comments (0) | TrackBack (0)

Monday, October 26, 2009

FINRA Fines Scottrade for Inadequate AML Program

FINRA announced that it fined Scottrade $600,000 for failing to establish and implement an adequate anti-money laundering (AML) program to detect and trigger reporting of suspicious transactions, as required by the Bank Secrecy Act and FINRA rules.  FINRA requires brokerage firms to establish and implement anti-money laundering policies, procedures and internal controls reasonably designed to detect and cause the reporting of any suspicious transactions that could be related to possible violations of laws or regulations - regardless of whether those transactions are associated with suspicious movement of funds into or out of accounts.

Specifically, FINRA found that between April 2003 and April 2008, Scottrade failed to establish and implement an adequate AML program tailored to its business model, which primarily consists of providing an on-line platform for customers trading in securities. In 2003, Scottrade handled about 49,000 customer trades per day, and its volume grew to about 150,000 daily trades in 2007. Among the risks inherent to Scottrade's brokerage model and the firm's substantial trading volume are an increased risk of identity theft, account intrusions and the use of customer accounts to launder money using securities or other financial instruments, or to violate securities laws.

FINRA has advised firms that in designing their AML program, they should consider factors such as their size, location, business activities, the types of accounts they maintain and the types of transactions in which their customers engage. FINRA also has instructed on-line firms such as Scottrade to consider conducting computerized surveillance of account activity to detect suspicious transactions.

 In concluding this settlement, Scottrade neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

October 26, 2009 in Current Affairs, Other Regulatory Action | Permalink | Comments (0) | TrackBack (0)