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SEC, FINRA fine broker and Chinese bank $7.2 million for suspicious penny stock sales

The Securities and Exchange Commission settled charges on Wednesday against broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC, the U.S. unit of Industrial and Commercial Bank of China Limited, for failing to report Suspicious Activity Reports or SARs for sales of billions of penny inventory shares. Without admitting or denying the SEC's findings, Chardan agreed to pay a $1 million penalty, ICBCFS to pay $860,000, and Chardan's anti-money laundering officer Jerard Basmagy, who the SEC alleged aided and abetted the violations, will pay $15,000. Basmagy additionally agreed to industry and penny inventory bars for a minimum of three years. FINRA additionally settled an motion against ICBCFS Wednesday the place the broker-dealer unit agreed to pay a $5.three million penalty and to retain an impartial compliance advisor. According to the SEC's criticism, Chardan, an introducing dealer, liquidated more than 12.5 billion penny inventory shares for seven of its shoppers from October 2013 to June 2014 and ICBCFS cleared the transactions. Chardan and ICBCFS didn't report any SARs even supposing the transactions raised purple flags, including similar trading patterns and sales in issuers who lacked revenues and products and regardless of ICBCFS in the long run prohibiting trading in penny shares by means of one of the most shoppers.