The Securities and Exchange Commission (SEC) keeps looking for ways to broaden the reach of its enforcement powers. On Tuesday, the agency announced charges against Archipelago Trading Services Inc. (ATSI), a Chicago-based broker-dealer.

The firm needed to scrutinize trading more closely, the regulators believe. Hundreds of reports of suspicious activity reports (SARs) should have been forthcoming from 2012 to 2020.

ATSI Neglected Its Duty to File Suspicious Activity Reports

According to the SEC, ATSI failed to file at least 461 Suspicious Activity Reports (SARs) related to over-the-counter (OTC) securities trades executed on ATSI’s alternative trading system Global OTC.

The unfiled SARs involved mostly microcap and penny stock securities, which the SEC considers risky investments.

Specifically, ATSI’s sole business is operating Global OTC, an alternative trading system used by broker-dealers to trade OTC stocks.

Although thousands of daily trades in risky microcap and penny stocks occurred on Global OTC, ATSI did not establish an anti-money laundering surveillance program until September 2020, the SEC said.

This failure violates Section 17(a) of the Securities Exchange Act and Rule 17a-8, which re

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Author: Josh Adams

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