The SEC alleged Wednesday that two former anti-money laundering compliance officers for a New York broker dealer aided and abetted their firm’s AML violations.
One of the compliance officers settled the SEC charges.
Kevin McKenna agreed to pay penalties of $20,000 for aiding and abetting Aegis Capital Corp.’s violations.
The SEC barred McKenna from serving in a compliance or AML capacity in the securities industry, with a right to reapply. He didn’t admit or deny the SEC’s findings.
The SEC charged another former Aegis AML compliance officer, Eugene Terracciano, with failing to file suspicious activity reports on behalf of Aegis.
In an administrative complaint Wednesday, the SEC alleged that Terracciano aided and abetted and caused Aegis’ violations.
The charges against Terracciano will be scheduled for a public hearing before an administrative law judge, the SEC said.
The SEC’s complaint against Terracciano is here (pdf).
Also Wednesday, Aegis Capital was fined a combined $1.3 million by the SEC and FINRA for AML and reporting failures.
The SEC penalized Aegis $750,000 after it admitted failing to file suspicious activity reports or SARs “on numerous suspicious transactions.”
Independent Wall Street regulator FINRA imposed a $550,000 penalty on the firm. FINRA said Aegis didn’t properly supervise its AML program.
In a related action Wednesday, the SEC fined Aegis’ owner and CEO Robert Eide $40,000.
Eide was” found to have caused” the firm’s infractions, the SEC said.
Eide didn’t admit or deny the SEC’s findings.
Aegis Capital is based in New York City and has about 400 brokers.
The SEC said Terracciano served as Aegis’ AML compliance officer from September 2013 to September 2015.
He was responsible for filing SARs on the firm’s behalf, the SEC said.
“Throughout the relevant period, Terracciano became aware of transactions that exhibited numerous AML red flags through alerts from Aegis’ clearing firms,” the SEC said.
According to the allegations,
Although the AML Alerts raised many red flags — including many red flags listed in Aegis’ written supervisory procedures as examples of suspicious activities –Terracciano did not file SARs on Aegis’ behalf regarding these transactions and did not produce a written analysis or otherwise demonstrate that he had considered filing SARs for these transactions.
The SEC said Terracciano “willfully aided and abetted and caused Aegis’ violations” of the securities laws.
Richard L. Cassin is the publisher and editor of the FCPA Blog.