The US Securities and Exchange Commission has settled its charges against the Colorado-based registered broker-dealer GWFS Equities Inc. for violating the federal securities laws related to the filing of Suspicious Activity Reports (SARs). GWFS is involved in supplying services to employer-sponsored retirement plans.
US law requires broker-dealers to file SARs for transactions that are suspected to be fraudulent or irregular. The US Financial Crimes Enforcement Network (FinCEN) recommends that all SARs include five important pieces of information, namely the who, what, when, where, and why of the suspicious activity. During 2015-18, GWFS was aware of external malicious entities trying to access the retirement accounts of individual plan participants. Moreover, GWFS was aware that the malicious actors were using illicitly procured personal identifying information of the plan participants. Despite this knowledge, GWFS failed to file over 130 SARs. Moreover, the over 300 SARs that GWFS filed during the period lacked the five important elements sought by FinCEN.
While deciding upon the settlement offer, the Commission took note of GWFS’ cooperation with the investigation and its remedial efforts. The company’s remedial measures included hiring dedicated AML staff, ensuring delegation of responsibility for filing SARs, and implementing new SAR-related policies, procedures and training. GWFS has agreed to a settlement with a $1.5 million penalty. Additionally, the Commission has ordered GWFS to refrain from future breaches of AML/CFT regulations.