July 29, 2020

FINRA fines retail brokerage firm for AML failures

On July 28, 2020, the Financial Industry Regulatory Authority reached a settlement with Hilltop Securities, a retail brokerage based in Dallas, for failures in the firm’s anti-money laundering program between 2015 and 2016.  In addition to imposing a $475,000 fine and formally censuring Hilltop, the settlement requires the firm to take remedial measures and to engage an independent consultant to review the firm’s policies, systems and procedures relating to compliance with the Bank Secrecy Act and FINRA regulations for the period between April 2016 and the present.

According to the documents, Hilltop failed to reasonably review and detect potentially suspicious activity in connection with $221 million worth of low-priced securities trades; as these trades may have warranted the filing of suspicious activity reports with the Financial Crimes and Enforcement Network, Hilltop’s conduct violated FINRA Rules 3310(a) and 2010.  FINRA also found that the firm failed to devote adequate resources for the successful implementation its AML program. 

As part of the settlement, the independent consultant will report to FINRA within six months regarding the adequacy of Hilltop’s compliance program, including recommendations for modifications and additions to systems, procedures and training with respect to low-priced securities.  Hilltop will have 60 days to adopt and implement the consultant’s recommendations.

Settlement Agreement