A broker-dealer agreed to pay a $2.8 million civil penalty to settle charges that it failed to file Suspicious Activity Reports ("SARs") with the Financial Crimes Enforcement Network. The SEC alleged that the broker dealer failed to file SARs on suspicious transactions conducted by numerous independent investment advisers through the broker-dealer's custodial platform.
As alleged in the Complaint, Charles Schwab & Co., Inc. ("Schwab") terminated its business relationship with 83 independent advisers because they violated Schwab's internal policies and procedures and put customer funds at risk. The SEC found that Schwab failed to file SARs for suspicious transactions involving 37 of the terminated advisers. The investment advisers allegedly engaged in suspicious transfers of funds, charged excessive advisory fees, improperly accessed customer accounts to make trades, and used Schwab's custodial platform despite no longer being registered as investment advisers.
Schwab agreed to settle without admitting or denying the charges.
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