SEC Charges OTC Link LLC with Failing to File Suspicious Activity Reports
summary
New York-based broker-dealer OTC Link LLC agreed to pay $1.19 million to settle SEC charges for failing to file any Suspicious Activity Reports between March 2020 and May 2023.
paragraph
OTC Link LLC violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 by failing to implement adequate anti-money laundering policies. The firm failed to file any Suspicious Activity Reports (SARs) for over three years despite facilitating tens of thousands of transactions. To settle the charges, the broker-dealer agreed to a $1.19 million penalty, a censure, and a cease-and-desist order.
narrative
The SEC has charged New York-based broker-dealer OTC Link LLC for failing to implement adequate anti-money laundering (AML) procedures to detect suspicious transactions. From March 2020 through May 2023, the firm failed to file a single Suspicious Activity Report (SAR) despite operating three alternative trading systems that facilitate tens of thousands of OTC securities transactions. These violations included breaches of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8. To resolve the charges, OTC Link agreed to pay a $1.19 million penalty, accept a censure, and comply with a cease-and-desist order. Additionally, the firm must continue engaging a compliance consultant to review and improve its AML policies. The SEC noted that such failures deprive regulators of critical information regarding potential securities law and money-laundering violations.
Classified broker-dealer-fraud(confidence 97%). EDGAR detection: forms Form D· recall 29% / precision 9%. detection rule →
Statutes
Parties
Alexander LeffertsEdward JanowskyHermann VargasNew York Regional OfficeOTC Link LLCsandeep satwalekarsec orderSecurities and Exchange CommissionSteve Vitulanotejal d. shahWilliam Conway
Keywords
otclinksecsuspicious activitysuspiciousfilesecuritiesfailing fileactivity reportsactivitytransactionsorderreportsconductedfile suspicious
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 1
- $1.19M $1.19 million $1M–$10M
Entities 12
- person Alexander Lefferts
- person Edward Janowsky
- person Hermann Vargas
- organization New York Regional Office
- company OTC Link LLC
- organization OTC Link LLC
- person sandeep satwalekar
- agency sec order
- agency Securities and Exchange Commission
- person Steve Vitulano
- person tejal d. shah
- person William Conway
Triples 6
- Securities and Exchange Commission announced charges OTC Link LLC
- OTC Link LLC agreed to pay $1.19 million
- SEC order finds OTC Link LLC failed to adopt or implement reasonably designed anti‑money laundering policies and procedures
- SEC order finds OTC Link LLC did not file a single SAR
- OTC Link LLC agreed to a censure and a cease-and-desist order
- SEC order directs OTC Link LLC to continue its engagement of a compliance consultant
PDF (from attached: pdf)
Text layers
Extracted body text (2,523c)
The Securities and Exchange Commission today announced charges against OTC Link LLC, a New York-based broker-dealer, for failing to file numerous reports of suspicious financial transactions, known as Suspicious Activity Reports (SARs), for a period of more than three years. OTC Link agreed to pay $1.19 million to settle the charges. To help detect potential securities law and money-laundering violations, broker-dealers like OTC Link are required to file SARs describing suspicious transactions conducted through their firms. According to the SEC’s order, OTC Link’s sole line of business is its operation of three alternative trading system (ATS) platforms, OTC Link ATS, OTC Link ECN, and OTC Link NQB. The three OTC Link ATSs are used by broker-dealers on a daily basis to execute or facilitate tens of thousands of transactions in over-the-counter (OTC) securities, many of which are considered microcap or penny stock securities. The SEC’s order finds that, from March 2020 through May 2023, OTC Link failed to adopt or implement reasonably designed anti-money laundering (AML) policies and procedures to surveil transactions conducted through its ATSs for possible red flags of suspicious activity. As a result, OTC Link did not file a single SAR over this time period. “Broker-dealers are critical gatekeepers to the securities markets and must diligently monitor for suspicious transactions,” said Tejal D. Shah, Associate Regional Director of the SEC’s New York Regional Office. “When firms like OTC Link fail to file SARs, they deprive regulators and law enforcement of important information about suspicious activity.” The SEC’s order finds that OTC Link violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder. Without admitting or denying the SEC’s findings, OTC Link agreed to a censure and a cease-and-desist order in addition to the $1.19 million penalty. The SEC’s order also directs OTC Link to continue its engagement of a compliance consultant to review and recommend changes to the firm’s AML policies and procedures. The SEC’s investigation was conducted by William Conway and Sandeep Satwalekar under the supervision of Ms. Shah of the SEC’s New York Regional Office, with assistance from the SEC’s Bank Secrecy Act Review Group and Alexander Lefferts in the SEC’s Office of Investigative and Market Analytics. The examination that led to the investigation was conducted by Edward Janowsky, Hermann Vargas, and Steve Vitulano of the SEC’s Division of Examinations.
OCR text (2,523c · html-text · 99% conf)
The Securities and Exchange Commission today announced charges against OTC Link LLC, a New York-based broker-dealer, for failing to file numerous reports of suspicious financial transactions, known as Suspicious Activity Reports (SARs), for a period of more than three years. OTC Link agreed to pay $1.19 million to settle the charges. To help detect potential securities law and money-laundering violations, broker-dealers like OTC Link are required to file SARs describing suspicious transactions conducted through their firms. According to the SEC’s order, OTC Link’s sole line of business is its operation of three alternative trading system (ATS) platforms, OTC Link ATS, OTC Link ECN, and OTC Link NQB. The three OTC Link ATSs are used by broker-dealers on a daily basis to execute or facilitate tens of thousands of transactions in over-the-counter (OTC) securities, many of which are considered microcap or penny stock securities. The SEC’s order finds that, from March 2020 through May 2023, OTC Link failed to adopt or implement reasonably designed anti-money laundering (AML) policies and procedures to surveil transactions conducted through its ATSs for possible red flags of suspicious activity. As a result, OTC Link did not file a single SAR over this time period. “Broker-dealers are critical gatekeepers to the securities markets and must diligently monitor for suspicious transactions,” said Tejal D. Shah, Associate Regional Director of the SEC’s New York Regional Office. “When firms like OTC Link fail to file SARs, they deprive regulators and law enforcement of important information about suspicious activity.” The SEC’s order finds that OTC Link violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder. Without admitting or denying the SEC’s findings, OTC Link agreed to a censure and a cease-and-desist order in addition to the $1.19 million penalty. The SEC’s order also directs OTC Link to continue its engagement of a compliance consultant to review and recommend changes to the firm’s AML policies and procedures. The SEC’s investigation was conducted by William Conway and Sandeep Satwalekar under the supervision of Ms. Shah of the SEC’s New York Regional Office, with assistance from the SEC’s Bank Secrecy Act Review Group and Alexander Lefferts in the SEC’s Office of Investigative and Market Analytics. The examination that led to the investigation was conducted by Edward Janowsky, Hermann Vargas, and Steve Vitulano of the SEC’s Division of Examinations.