Industrial & Commercial Bank of China Financial Services LLC will pay $860,000 and one of its correspondents, Chardan Capital Markets LLC, will pay civil penalties of $1.0 million to the Securities and Exchange Commission.
From at least October 2013 through June 2014, Chardan allegedly failed to file suspicious activity reports when it knew, suspected, or had reason to suspect that certain penny stock transactions that it executed on behalf of its customers involved the use of its firm to facilitate fraudulent activity or had no business or apparent lawful purpose.
During the same period, Industrial & Commercial Bank cleared billions of shares of transactions in low-priced securities on behalf of certain of Chardan's customers, primarily in delivery-versus-payment accounts. The company contacted Chardan numerous times about its customers' transactions and ultimately ended trading in penny stocks by the relevant Chardan customers. Nonetheless, it allegedly did not file suspicious activity reports.
Both the companies did not admit or deny the findings.
