In this story. OTC Link has been fined $1.19 million by the U.S. Securities and Exchange Commission for failing to file a single Suspicious Activity Report (SAR) for three years.
The company failed to report suspicious transactions despite operating three large trading platforms for high-risk securities.
The SEC is forcing OTC #Link to change its anti-money laundering policy and hire a compliance consultant to prevent this from happening again. New York-based broker-dealer OTC Link has just been penalized by the SEC for a terrible mistake. OTC Link failed to file a single suspicious activity report (SAR) for three years, as required by law. The fine amounts to £1.19 million.
OTC Link operates three alternative trading system (ATS) platforms - OTC Link ATS, OTC Link ECN and OTC Link NQB.
The SEC alleges that these platforms provide a convenient venue for broker-dealers to execute tens of thousands of trades each day in the over-the-counter securities market.
These are microcap and penny stocks, which are often high-risk types subject to manipulation. The SEC decided to take action after discovering that OTC Link failed to file SARs from March 2020 through May 2023.
The company did not have adequate policies in place to flag suspicious transactions.
Such SARs are important because they alert authorities to potential securities law violations and money laundering.
Tejar D. Shah, Acting Director of the SEC's New York office, explained that broker-dealers like OTC Link should be the "gatekeepers" in the securities markets: if companies like OTC Link do not file SARs, they deprive regulators and law enforcement of important information about suspicious activity. But it's not just fines that OTC Link faces - the SEC has also ordered the company to be censured and ordered to cease operations. If that wasn't enough, the SEC has held OTC Link accountable by hiring a compliance consultant.
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