← Broker database 2024-04-11
FINRA Disciplinary Action: Lek Securities Corporation Expelled and Fined $1.13 Million for Anti-Money Laundering Failures and Supervisory Violations (Decision Appealed)
According to FINRA, Lek Securities Corporation (CRD #33135) of New City, New York, was expelled from FINRA membership and fined $1,130,000 pursuant to an Office of Hearing Officers (OHO) decision issued April 11, 2024, under FINRA Case #2021071137001. This decision has been appealed to the National Adjudicatory Council (NAC), and the sanctions are not in effect pending the completion of that review.
Lek Securities Corporation is accused of a broad pattern of regulatory violations. The firm allegedly accepted deposits and liquidated low-priced securities in violation of a business line suspension that had been imposed by FINRA. Additionally, the firm allegedly failed to implement 18 of the 98 recommendations made by an independent consultant retained as part of prior regulatory requirements. Despite this failure, the firm is accused of falsely certifying to FINRA that it had achieved full compliance with the consultant's recommendations.
Among the most serious allegations, the firm allegedly failed to develop and implement an adequate anti-money laundering (AML) program as required by the Bank Secrecy Act and FINRA rules. The firm is accused of failing to detect suspicious activities in customer accounts, including activities consistent with pump-and-dump schemes — a form of securities fraud in which bad actors artificially inflate the price of a stock through misleading promotions before selling their shares at the inflated price, leaving other investors with losses. The firm also allegedly failed to adequately supervise its low-priced securities business and willfully failed to retain records of unapproved communications as required by federal securities regulations.
Anti-money laundering compliance is one of the most critical obligations of any brokerage firm. AML programs are designed to prevent the financial system from being used to facilitate money laundering, terrorist financing, and other forms of financial crime. When a firm fails to implement adequate AML controls, it creates vulnerabilities that can be exploited by bad actors, potentially resulting in significant financial harm to innocent investors and the broader market.
For investors, this case demonstrates the importance of working with firms that maintain strong compliance programs and have clean regulatory records. Investors can research a firm's disciplinary history through FINRA's BrokerCheck tool before opening an account.