The Securities and Exchange Commission today announced charges against Archipelago Trading Services Inc. (ATSI) for failing to file hundreds of legally required reports of suspicious financial transactions, known as Suspicious Activity Reports (SARs), between August 2012 and September 2020. The charges were related to transactions in over-the-counter (OTC) securities executed on ATSI’s alternative trading system (ATS). ATSI, a Chicago-based broker-dealer, has agreed to pay $1.5 million to settle the charges.
According to the SEC’s order, ATSI’s sole line of business is to operate an OTC equity securities ATS, known as Global OTC, which is used by broker-dealers to execute trades in OTC securities. Global OTC plays a significant role in executing trades of microcap and penny stock securities, which are not listed on any national exchange and tend to be high-risk securities. Despite thousands of high-risk microcap and penny stock securities transactions executed daily on Global OTC, the SEC order found that ATSI failed to establish an anti-money laundering surveillance program for its transactions until September 2020. ATSI therefore failed to surveil transactions executed on Global OTC for possible red flags regarding suspicious manipulative trading activity, including possible spoofing, layering, wash trading, and pre-arranged trading. As a result, the SEC’s order found, ATSI failed to file at least 461 SARs, most of which involved microcap or penny stock securities.
‘Enforcement 40’ for 2020
Join Us On LinkedIn
Join the Securities Litigation and Enforcement Group on LinkedIn