US Tiger and TradeUP Securities have settled with the
Financial Industry Regulatory Authority (FINRA) over a series of compliance
violations, including failures related to their anti-money laundering (AML)
programs and the retention of electronic communications.
Firms Fined for Inadequate AML Practices
Both firms, which are affiliated and owned by an offshore
holding company, serviced foreign financial institution omnibus accounts
involved in trading thinly traded, low-priced securities.
Between November 2019
and March 2021 (for US Tiger) and between April 2021 and June 2023 (for
TradeUP), the firms’ AML programs were deemed inadequate for detecting and
reporting potentially suspicious transactions. Additionally, the firms failed
to conduct proper due diligence on correspondent accounts for foreign financial
institutions.
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Firms Penalized for Communication Retention Failures
The violations extended to the firms’ electronic
communication systems. From January 2019 to November 2021, US Tiger and TradeUP
used a messaging and document-sharing platform that automatically deleted
communications, breaching retention rules under the Exchange Act and FINRA
regulations.
According to FINRA Rule, member firms must retain all
communications for a minimum of three years. However, both firms failed to
implement procedures to preserve and review the communications sent via the
platform.
As a result of these violations, US Tiger has been fined
$250,000, while TradeUP faces a larger fine of $700,000. In addition, TradeUP
must hire an independent consultant to review and enhance its compliance
procedures. Both firms have been censured as part of the settlement.
Finance Magnates contacted the firms for comment, but no
response has been received as of writing.
This article was written by Tareq Sikder at www.financemagnates.com.
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