(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 Departments 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 SECs statement. The SEC, which said that its investigation is continuing, found that Oppenheimer didnt inquire whether the sales were exempt from U.S. registration requirements.
Despite red flags suggesting that Oppenheimers customers 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 SECs enforcement division.
Stefan Prelog, a spokesman for Oppenheimer, declined to comment.
Dave Michaels is a reporter with Bloomberg News.
- Former J.P. Morgan Rep Barred, Two Others Suspended and Fined
- Former LPL, Cetera Advisor Suspended for 60 Days
- Former JP Morgan Rep Banned From Brokerage Industry
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access