According to FINRA, Clearview Trading Advisors, Inc. and its AML Compliance Officer Gregg Harley Ettin were sanctioned for failing to establish and implement an adequate anti-money laundering compliance program. The firm was fined $100,000 and Ettin was fined $25,000 and suspended for nine months in any principal capacity.

The findings revealed that despite significant business expansion toward liquidation of low-priced securities, the firm and Ettin failed to tailor their AML program to this high-risk business. They did not use exception reports or automated tools to monitor customer account activity for suspicious transactions, instead relying solely on manual review which proved inadequate. The firm failed to establish reasonable processes to identify red flags specific to low-priced securities issuers or patterns of suspicious trading. Even though their procedures outlined red flags to watch for, they did not explain how to monitor for or investigate those red flags.

Additionally, the firm and Ettin failed to establish adequate supervisory systems for Section 5 compliance regarding restricted securities. They primarily delegated reviews to a third party without proper formalization or oversight, and Ettin failed to conduct reasonable inquiry before executing trades in low-priced securities.

This case demonstrates the critical importance of having an AML program specifically designed for your firm's actual business model. Firms dealing with low-priced securities face heightened risks of money laundering and must implement robust, automated monitoring systems rather than relying on manual reviews. Investors should be aware that inadequate AML controls can expose them to fraudulent schemes and manipulative trading practices.