SEC Charges Three Broker-Dealers with Filing Deficient Suspicious Activity Reports

The Securities and Exchange Commission today announced that broker-dealers Webull Financial LLC, Lightspeed Financial Services Group LLC, and Paulson Investment Company, LLC have agreed to settle charges that they filed with law enforcement suspicious activity reports (SARs) that failed to include important, required information. The three broker-dealers agreed to pay $275,000 combined in civil penalties to settle the SEC’s charges. Federal law requires broker-dealers to file SARs to report transactions that the broker-dealer has reason to suspect involve, among other things, funds derived from illegal activity or activity that has no apparent lawful purpose. The SARs must contain “a clear, complete, and concise description of the activity, including what was unusual or irregular that caused suspicion.” According to the SEC orders, each of the three broker-dealers filed multiple deficient SARs over a four-year period beginning in 2018. “Suspicious activity reports play a vital role in keeping our markets safe, and the failure of broker-dealers to include necessary information to explain suspicious transactions deprives law enforcement and regulatory agencies of valuable and timely intelligence, undermining the very purpose of the SARs,” said Jason Burt, Director of the SEC’s Denver Regional Office. “Today’s cases reinforce the importance of complying with the applicable regulations and guidance surrounding the filing of SARs.” The SEC’s orders find that the broker-dealers violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. Without admitting or denying the findings, the firms agreed to be censured, cease and desist from violating the charged provisions, and pay civil penalties listed below. Further, Webull Financial LLC and Paulson Investment Company, LLC agreed to undertake a review of their anti-money-laundering programs by compliance consultants. The resolutions reflect each of the firms’ cooperation after being contacted by Commission staff, as well as certain remedial measures taken by Lightspeed: Webull Financial LLC, of New York, N.Y., agreed to pay a $125,000 civil penalty. Lightspeed Financial Services Group LLC, of Morristown, N.J., agreed to pay a $75,000 civil penalty. Paulson Investment Company, LLC, of Lake Oswego, Ore., agreed to pay a $75,000 civil penalty. The SEC’s investigation was led by Kimberly Steckling, with assistance from Kenneth Stalzer and Jacqueline Moessner of the Denver Regional Office; Daniel Goldberg, Andrae Eccles, Damon Reed, David Cohen, Susan Schneider, and Naomi Sevilla of the Office of Market Intelligence’s (OMI) Bank Secrecy Act Review Group; and Giz Tariku of OMI’s DATA and Analytics Group. The investigation was supervised by Ian Karpel, Nicholas Heinke, and Jason Burt of the Denver Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA).

The Securities and Exchange Commission today announced that broker-dealers Webull Financial LLC, Lightspeed Financial Services Group LLC, and Paulson Investment Company, LLC have agreed to settle charges that they filed with law enforcement suspicious activity reports (SARs) that failed to include important, required information. The three broker-dealers agreed to pay $275,000 combined in civil penalties to settle the SEC’s charges. Federal law requires broker-dealers to file SARs to report transactions that the broker-dealer has reason to suspect involve, among other things, funds derived from illegal activity or activity that has no apparent lawful purpose. The SARs must contain “a clear, complete, and concise description of the activity, including what was unusual or irregular that caused suspicion.” According to the SEC orders, each of the three broker-dealers filed multiple deficient SARs over a four-year period beginning in 2018. “Suspicious activity reports play a vital role in keeping our markets safe, and the failure of broker-dealers to include necessary information to explain suspicious transactions deprives law enforcement and regulatory agencies of valuable and timely intelligence, undermining the very purpose of the SARs,” said Jason Burt, Director of the SEC’s Denver Regional Office. “Today’s cases reinforce the importance of complying with the applicable regulations and guidance surrounding the filing of SARs.” The SEC’s orders find that the broker-dealers violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. Without admitting or denying the findings, the firms agreed to be censured, cease and desist from violating the charged provisions, and pay civil penalties listed below. Further, Webull Financial LLC and Paulson Investment Company, LLC agreed to undertake a review of their anti-money-laundering programs by compliance consultants. The resolutions reflect each of the firms’ cooperation after being contacted by Commission staff, as well as certain remedial measures taken by Lightspeed: Webull Financial LLC, of New York, N.Y., agreed to pay a $125,000 civil penalty. Lightspeed Financial Services Group LLC, of Morristown, N.J., agreed to pay a $75,000 civil penalty. Paulson Investment Company, LLC, of Lake Oswego, Ore., agreed to pay a $75,000 civil penalty. The SEC’s investigation was led by Kimberly Steckling, with assistance from Kenneth Stalzer and Jacqueline Moessner of the Denver Regional Office; Daniel Goldberg, Andrae Eccles, Damon Reed, David Cohen, Susan Schneider, and Naomi Sevilla of the Office of Market Intelligence’s (OMI) Bank Secrecy Act Review Group; and Giz Tariku of OMI’s DATA and Analytics Group. The investigation was supervised by Ian Karpel, Nicholas Heinke, and Jason Burt of the Denver Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA).