The Securities and Exchange Commission (SEC) in the US has settled charges against Chardan Capital Markets and Industrial and Commercial Bank of China Financial Services (ICBCFS) for failing to file suspicious activity reports (SARs).
The investigation of SEC showed that Chardan had liquidated 12.5 billion penny stock shares for its clients from October 2013 to June 2014, where ICBCFS was the liquidation institution of those transactions. However, both companies failed to file SARs in the face of numerous red flags, said Marc Berger, Director of the SEC’s New York regional office. For the accusation made by SEC, Chardan and ICBCFS accepted $5.3 million and $860,000 penalties respectively. Besides, Jerard Basmagy, Chardan's anti-money laundering (AML) officer, was required to pay $15,000 and the industry and penny stock bars for a minimum of three years. The officer was once found to have aided and abetted and caused the firm's violations.
Apart from the accusation made by SEC, ICBCFS also faced charges from the Financial Industry Regulatory Authority (FINRA). ICBCFS started to clear and settle equity transactions in the United States in 2012. From January 2013 to September 2015, the volume of transactions involving penny stocks was more than 33 billion shares, which undoubtedly generated huge benefits for its clients. FINRA notified that ICBCFS failed to establish a reasonably designed AML program to detect and cause the reporting of potentially suspicious transactions, particularly those involving penny stocks. Although ICBC did not admit or deny the FINRA charges, it agreed to pay $5.3 million for the lack of AML systems to act as a gatekeeper of the industry.
With the fast growth of China’s economy and the continuous improvement of the comprehensive strength of domestic enterprises, as well as the implementation of the “One Belt, One Road” policy, an increasing amount of Chinese enterprises are beginning to expand their global footprint and establish their presence in Europe.
TPA Global has developed a practical roadmap of 6 steps meant to guide CFOs in their Journey of rising above troubles to reach a situation of full control. These steps are presented in a series of short video clips (3-5 minutes):