Alpine Securities Corporation (Alpine), a penny stock broker, recently lost its years-long battle to curtail what it called Securities and Exchange Commission (SEC) "enforcement" of certain Bank Secrecy Act (BSA) recordkeeping requirements on broker-dealers. Alpine's setback came when the US Supreme Court denied Alpine's petition for certiorari regarding a 2019 SEC action against Alpine for failing to file Suspicious Activity Reports (SARs). As we explained in our previous post about Alpine's petition, Alpine argued that the SEC did not have the statutory authority under the Securities Exchange Act of 1934 (Exchange Act) to apply the SAR filing requirements in the BSA on broker-dealers. Alpine asserted, among other reasons, that Congress expressly delegated BSA enforcement authority to the US Department of Treasury, not to the SEC. Thus, according to Alpine, the SEC, by basing an enforcement action on the SAR recordkeeping requirements, amounted to exercising powers that Congress never granted it.
While the Court did not shed light on why it denied cert, the effect is a clear signal to Alpine and other broker-dealers: for now, the SEC has the authority under Section 17(a) of the Exchange Act (and Rule 17a-8) to enforce BSA recordkeeping requirements, including suspicious activity reporting, on broker-dealers.
To learn more about the SEC's focus on broker-dealer AML compliance supervisory and enforcement expectations, read this Advisory.
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