(Bloomberg) -- Oppenheimer Holdings will pay $20 million to settle U.S. regulatory claims that it improperly sold billions of shares of penny stocks on behalf of an offshore brokerage.

Oppenheimer admitted that it failed to report red flags that its client Gibraltar Global Securities, a Bahamas-based firm, was carrying out the transactions without being registered as in the U.S., the Securities and Exchange Commission said in a statement. The company will pay $10 million to settle the SEC case and another $10 million to resolve a related case with the Treasury Department’s Financial Crimes Enforcement Network.

Oppenheimer also acknowledged additional sales of penny stocks for a different customer that resulted in about $588,400 in commissions, according to the SEC’s statement. The SEC, which said that its investigation is continuing, found that Oppenheimer didn’t inquire whether the sales were exempt from U.S. registration requirements.

“Despite red flags suggesting that Oppenheimer’s customer’s stock sales were not exempt from registration, Oppenheimer nonetheless allowed unregistered sales to occur through its account, failing in its gatekeeper role,” said Andrew Ceresney, director of the SEC’s enforcement division.

Stefan Prelog, a spokesman for Oppenheimer, declined to comment.

Dave Michaels is a reporter with Bloomberg News.

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