New York-based brokerage firm J.H. Darbie & Co. consented to pay a $125,000 penalty to resolve charges levied by the Securities and Exchange Commission (SEC) that the firm failed to report suspicious activity regarding penny stock transactions.
The U.S. District Court for the Southern District of New York entered judgment against J.H. Darbie on Sept. 13, the SEC announced in a litigation release Friday. The outcome resolves a complaint filed by the SEC in December alleging the firm failed to report suspicious activity on “tens of billions” of shares of low-priced securities.
J.H. Darbie must also retain an independent anti-money laundering (AML) compliance consultant as part of the judgment’s requirements.
Despite having written policies and procedures for how and when to submit suspicious activity reports to the Treasury Department’s Financial Crimes Enforcement Network, J.H. Darbie failed to investigate and file SARs for numerous transactions from January 2018 to January 2020, the SEC claimed in its complaint.
The agency said J.H. Darbie did not follow its own AML policies and procedures by ignoring or failing to investigate red flags within deposit, sale, or withdrawal activities. On 168 occasions, the firm failed to investigate or file SARs on red flags with suspicious deposits, sales, or withdrawal activities.
J.H. Darbie did not respond to a request for comment. The firm neither admitted nor denied the SEC’s findings.