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Oppenheimer & Co. Inc.

01/27/2015
Fine Amount: 
$20M
Issued by: 

$20M CMP Oppenheimer & Co. Inc.


The Financial Crimes Enforcement Network (FinCEN) and the Securities and Exchange Commission (SEC) on January 27, 2015, announced they had assessed a $20 million civil money penalty against Oppenheimer & Co., Inc. for willfully violating the Bank Secrecy Act (BSA). Oppenheimer, a securities broker–dealer in New York, admitted that it failed to establish and implement an adequate anti–money laundering program, failed to conduct adequate due diligence on a foreign correspondent account, and failed to comply with requirements under Section 311 of the USA PATRIOT Act. FinCEN and the New York Stock Exchange assessed a civil money penalty of $2.8 million against Oppenheimer in 2005 for similar violations. In 2013, the Financial Industry Regulatory Authority fined the firm $1.4 million for violations of securities laws and anti–money laundering failures.


From 2008 through May 2014, Oppenheimer conducted business without establishing and implementing adequate policies, procedures, and internal controls reasonably designed to detect and report suspicious activity. FinCEN identified 16 customers who engaged in patterns of suspicious trading through branch offices in five states. All the suspicious activity involved penny stocks, which typically are low–priced, thinly traded, and highly speculative securities that can be vulnerable to manipulation by stock promoters and “pump–and–dump” schemes. Oppenheimer failed to report patterns of activity in which customers deposited large blocks of unregistered or illiquid penny stocks, moved large volumes of penny stocks among accounts with no apparent purpose, or immediately liquidated those securities and wired the proceeds out of the account.


In addition, Oppenheimer itself designated a customer foreign financial institution as “high risk” but failed to assess the institution's specific risks as a foreign financial institution or conduct adequate due diligence. Oppenheimer inadequately monitored the foreign financial institution's transactions and consequently did not detect or investigate numerous suspicious transactions conducted through the account, including prohibited third–party activity and illegal penny stock trading.

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