The Securities and Exchange Commission today charged a Salt Lake City-based brokerage firm with securities law violations related to its alleged practice of clearing transactions for microcap stocks that were used in manipulative schemes to harm investors.
To help detect potential securities law and money laundering violations, broker-dealers are required to file Suspicious Activity Reports (SARs) that describe suspicious transactions that take place through their firms. The SEC’s complaint alleges that Alpine Securities Corporation routinely and systematically failed to file SARs for stock transactions that it flagged as suspicious. When it did file SARs, Alpine Securities allegedly frequently omitted the very information that formed the bases for Alpine knowing, suspecting, or having reason to suspect that a transaction was suspicious. As noted in the complaint, guidance for preparing SARs from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clearly states that “[e]xplaining why the transaction is suspicious is critical.”
“As alleged in our complaint, by failing to file SARs, Alpine Securities deprived regulators and law enforcement of critically important information often related to trades in microcap securities used to investigate potentially serious misconduct,” said Julie Lutz, Director of the SEC’s Denver Regional Office.
The SEC’s complaint charges Alpine Securities with thousands of violations of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8.
The SEC’s investigation was conducted by L. James Lyman and Ian S. Karpel of the Denver Regional Office with assistance from Daniel J. Goldberg, Damon Reed, and Andrae S. Eccles of the Enforcement Division’s Bank Secrecy Act Review Group. The litigation will be led by Zachary T. Carlyle and Terry Miller and supervised by Gregory A. Kasper. The SEC’s examination that led to the investigation was conducted by Denise S. Saxon, Phil Perrone, and Joni S. Marks with assistance from Lisa Byington. The case involves the Enforcement Division’s Broker-Dealer Task Force, which is led by Antonia Chion and Andrew M. Calamari and focuses on current issues and practices within the broker-dealer community, developing national initiatives for potential investigations.
The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the U.S. Department of Homeland Security, FinCEN, and the Financial Industry Regulatory Authority.