According to FINRA, ViewTrade Securities, Inc. was censured and fined $250,000 for failing to establish adequate anti-money laundering programs, failing to detect and respond to suspicious activities, and failing to establish proper risk management controls for its market access business.
The firm's AML program contained significant deficiencies. Written procedures assigned responsibility for surveillance but provided no guidance on how to use reports, who would review them, or how to document and escalate issues. Many surveillance reports were not reasonably designed to detect suspicious or potentially manipulative transactions. The firm had no procedures to detect related customer accounts, relying solely on customers to report relationships and lacking systems to identify red flags like similar email or mailing addresses.
The firm accepted and routed customer orders in options but had no surveillance tools specific to options transactions. Reviewers relied on memory to identify patterns across multiple days rather than systematic analysis, and the firm failed to document its investigations of suspicious activity. The firm also failed to detect, investigate, and respond to red flags in IPO trading where it served as underwriter, including potential coordinated trading and suspicious money movements.
Additionally, the firm's market access procedures did not adequately describe processes for reviewing, escalating, and resolving surveillance exceptions for potentially manipulative activity. Anti-money laundering programs are the front line of defense against financial crimes that can victimize investors and destabilize markets. Adequate surveillance systems protect investors by identifying fraud, manipulation, and other misconduct before it causes widespread harm. This case illustrates how systematic AML failures can leave investors vulnerable to various forms of market abuse. Investors should consider a firm's AML compliance record when selecting a broker-dealer, as firms with weak controls may attract bad actors who pose risks to legitimate customers.
