A registered representative at an unnamed brokerage firm will pay $20,000 to settle charges by the Securities and Exchange Commission (SEC) that he failed to notify the firm’s anti-money laundering (AML) department of apparent suspicious transactions linked to an acquisition announcement.
Pierre Economacos agreed to cease and desist from further violations in reaching settlement, the SEC announced in an administrative proceeding Monday. He neither admitted nor denied the agency’s findings.
Two Republican commissioners dissented in the case, arguing the alleged suspicious activity Economacos failed to report was repayment of a loan.
The details: As a registered representative, Economacos was tasked with being the “‘first line of defense’” in detecting and reporting suspicious activity in customer accounts, the SEC said in its order.
The firm’s policies required Economacos to escalate red flags or unusual account activity to the AML department to determine whether to file a suspicious activity report (SAR).
In 2019, Economacos failed to escalate red flags in transactions made by his longtime customer that surrounded the acquisition announcement of the company where the customer’s close family member was an executive, the order stated.
Compliance considerations: In their dissenting opinion, SEC Commissioners Hester Pierce and Mark Uyeda argued the enforcement action could prompt compliance departments to “see red in every flag and file unnecessary SARs.”
“By levying punishment on a registered representative for failing to red flag a transaction and consequently failing to make an internal report, we are encouraging registered representatives to view all flags as various shades of red that require internal reporting,” the commissioners said. “… Such defensive filing serves no one—it imposes extra costs on firms and adds unhelpful clutter to the reporting data, making it less useful in the end.”
Based on details provided by the SEC, Economacos is believed to work for Raymond James unit Alex. Brown. The firm declined to comment when asked for confirmation.