Corporate & Securities Law

The Financial Industry Regulatory Authority fined Scottrade $600,000 for failing to have adequate anti-money laundering procedures in place to detect and report suspicious transactions.  In a statement, FINRA noted that as an online brokerage executing more than 150,000 trades daily, Scottrade's business model makes it vulnerable to heightened risks of identity theft, unauthorized access to customer accounts, or even money laundering activities.  The Bank Secrecy Act of 1970 requires brokerages to have anti-money laundering programs tailored to their own unique business models.  "Despite the large volume of online trading at Scottrade, the firm failed to establish any systematic or automated surveillance until 2005," FINRA executive vice president and chief of enforcement Susan Merrill said in the  statement.  "Then the automated system the firm implemented remained inadequate because it focused only on suspicious trading that was accompanied by suspicious money movement." According to Scottrade, it is taking this matter very seriously and it has made enhancements to its anti-money laundering program.

Source: InvestmentNews