A trio of investment industry firms are being sanctioned by U.S. securities regulators for transaction reporting failures.
On Friday, the U.S. Securities and Exchange Commission (SEC) charged Deutsche Bank Securities Inc. for failing to file certain reports required under anti-money laundering regulations, known as suspicious activity reports (SARs), in a timely way.
According to the SEC’s order, between April 2019 and March 2024, the firm took too long to respond to certain requests for information in connection with law enforcement or regulatory investigations. In two cases, the firm took more than two years to file the requested SARs, the SEC alleged.
“Even the best information collected from SARs is of limited use if it’s stale by the time it’s provided to law enforcement,” said Sheldon Pollock, associate director of the SEC’s New York office, in a release.
The firm agreed to settle the allegations without admitting or denying the SEC’s findings. It agreed to pay a US$4-million penalty, to accept a censure and to cease and desist from further violations as part of the settlement.
“Through this enforcement action, we are not only holding Deutsche Bank Securities accountable, we are also sending a clear message to other market registrants that timeliness in filing SARs is of paramount importance,” Pollock said.
Separately, the SEC also charged two other firms — Wells Fargo Clearing Services LLC and LPL Financial LLC — for filing securities trading data, known as blue sheet data, that contained inaccurate information about the trades or omitted certain information.
According to the SEC’s orders in those cases, between 2018 and 2023, Wells Fargo made approximately 11,195 blue sheet submissions that contained missing or inaccurate data for at least 10.6 million transactions, while LPL made at least 3,679 submissions that contained errors for at least 399,000 transactions between 2018 and 2021.
As a result, the SEC alleged that the firms both violated the broker-dealer recordkeeping and reporting provisions of the federal securities laws in the U.S.
“We use blue sheet data to detect wrongdoing and to protect investors through our enforcement efforts. These orders underscore the importance of the obligation to provide accurate and complete blue sheet data to the SEC,” said Thomas Smith, Jr., associate regional director in the SEC’s New York office, in a release.
The firms admitted to the SEC’s findings and agreed to be censured and to each pay a US$900,000 penalty.
The SEC also noted that both firms have since taken remedial action to prevent these sorts of reporting errors, and that Wells Fargo self-reported its failings, which resulted in it receiving a lighter penalty.
“These resolutions highlight the benefits of self-reporting, remediation, and cooperation when firms detect violations,” Smith, Jr. noted.
The U.S. Financial Industry Regulatory Authority (FINRA) also reached settlements with Wells Fargo and LPL for similar reporting failures in their blue sheet submissions to the industry self-regulatory organization. Both firms agreed to censures and to pay US$900,000 penalties to FINRA.