Alerts

SEC Brings First AML Enforcement Action For Broker-Dealer's Failure To File Suspicious Activity Report

June 5, 2007

On April 11, 2007, the Securities and Exchange Commission ("SEC") brought its first enforcement action against a broker-dealer and its principal for failing to file a Suspicious Activity Report ("SAR"), as required under the USA PATRIOT Act of 2001 ("PATRIOT Act"). The SEC alleges that Park Financial Group ("Park") and Gordon C. Cantley, its principal, aided and abetted and caused a scheme to pump and dump the stock of Spear & Jackson ("S&J"), conducted by Dennis Crowley, the CEO and chairman of S&J. After obtaining a temporary restraining order against Crowley, International Media Solutions ("IMS"), the investor relations firm that promoted the stock, and IMS's principals, the SEC obtained an Order instituting cease-and-desist proceedings against Park and Cantley, charging them with willfully aiding and abetting Crowley's violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The SEC also charged that Park willfully violated, and Cantley willfully aided and abetted violations of, the Exchange Act's books and records provision, Section 17(a) of the Exchange Act and Rule 17a-8 thereunder, by failing to file a SAR with respect to Crowley's activities.