The US Securities and Exchange Commission is ordering TD Ameritrade Inc. (AMTD) to pay a $500K fine for not submitting mandatory suspicious activity reports (SARs) even after the broker-dealer stopped doing business with 111 independent investment advisers. The regulator contends that between 2013 and September 2015, the firm ended its business relationships with these advisers, who were not TD Ameritrade employees, due to what it found to be “unacceptable business, credit, operational, reputational or regulatory risk” to itself or customers.
While the brokerage firm did submit a number of suspicious activity reports (SARs) regarding suspect transactions made by some of these advisers it had fired, it did not submit SARs reports on some of the other advisers with whom TD Ameritrade had also ended their business relationships.
The suspect activities at issue allegedly included suspicious trading—including moving losses from trade errors to clients—inappropriate money transfers, and making false and misleading statements to customers while serving as an investment adviser managing their TD Ameritrade accounts.
SARs
Brokerage firms are obligated to submit suspicious activity reports. The SEC believes that TD Ameritrade’s failure to submit the reports was because, during the period at issue, the firm neglected to report the advisers who’d been terminated, and their potentially questionable transactions, to the broker-dealer’s anti-money-laundering department. The regulator said that this failure violates the Commission’s rules.
When an investment adviser engages in inappropriate trades, makes misrepresentations and omissions, or improperly handle’s an investor’s funds, it is the customer that suffers. Brokerage firms that fail to properly supervise or report an investment adviser or broker accused of misconduct are not only potentially exposing investors to financial losses, but also, they may be making it possible for that investment adviser to engage in further fraud, negligence, or other wrongdoing.
Investment Adviser Fraud
At Shepherd Smith Edwards and Kantas, LLP, our investor lawyers represent individual investors and institutional investors nationwide in helping them to recoup their losses. If you are an investor who worked with a TD Ameritrade broker or an independent investment adviser was an affiliated with the firm and you suspect your losses may be due to fraud, negligence, or wrongdoing, contact our investment adviser fraud law firm today.
Read the SEC Order (PDF)
Frequently Asked Questions Suspicious Activity Reporting Requirements for Mutual Funds, FinCen.gov
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