Alerts

FinCEN and SEC Sanction Broker-Dealer and Chief Compliance Officer for AML Deficiencies Relating to Foreign Sub-Accounts

October 1, 2010

On September 1, 2010, the Financial Crimes Enforcement Network assessed a $50,000 civil penalty against Pinnacle Capital Markets, LLC ("Pinnacle" or the "Firm") — an online, registered broker-dealer — for the Firm's failure to comply with the customer identification program ("CIP") rule, and its failure to implement an adequate AML program and report suspicious transactions, as required by the Bank Secrecy Act ("BSA").

In a parallel action announced the same day, the U.S. Securities and Exchange Commission (the "SEC") instituted administrative cease-and-desist proceedings against Pinnacle and its President and Chief Compliance Officer, for violations of Securities Exchange Act Section 17(a) and Rule 17a-8, which require a broker-dealer to comply with the BSA reporting and recordkeeping requirements, including, among other things, the CIP rule. Pinnacle and its President and Chief Compliance Officer consented to the cease-and-desist order issued by the SEC. In addition, Pinnacle agreed to be censured and to pay a $25,000 fine.