The SEC Wants More Suspicious Activity Reports!

SEC Headquarters in Washington D.C.

According to Andrew Ceresney, director of the SEC Division of Enforcement, the SEC is considering enforcement cases against brokerages that fail to report suspicious activity.

According to the SEC, many U.S. brokerages are simply failing to report possible money laundering.

Citing statistics of that put the average number of reports at just 5 reports on average per brokerage firm per year, it would seem the SEC has a point.

Indeed, it is hard to believe that with billions of individual securities transactions conducted amongst millions of counter-parties across the 4,800 registered brokerages in the United States, that just 18,000 to 25,000 total suspicious activity reports would be filed per year.

Ceresney confirms that the SEC is still trying to figure out why the firms are not filing SARs.  Could it be that their KYC/AML tools are not up to the task?  Or perhaps they simply don’t want to be bothered with the time and effort required to interact with the regulator in filing them… either way, when the SEC comes knocking, Ceresney made it clear that the action “will send a strong and clear message”.

Read more at Many U.S. brokerages fail to report possible money laundering: SEC official.

How-to use KYC3 to find out who controls a company

Suppose you want to figure out who controls a company.  How do you do that?

Say you’re interested in the Mexican restaurant “El Torito”.  The first step is to search KYC3 for “El Torito”.  In the search results we quickly see that the first item returned is the entity “EL TORITO FRANCHISING CO“.  Clicking on it reveals that Fred Wolfe and Carmen Romano are related to the company.  

Using the drop down context menu on the entity (the little arrow located at the right side of the entity), we can even select “Show In Graph”, and presto a visible relationship diagram of the related entities pops up.

 

From this we quickly learn that the business is located in Long Beach, California.  We can also expand on these results by right clicking on one of the individuals.  For example, Fred Wolfe, as shown in the 2nd picture below.

So it looks like Fred is the CEO and he is quite the restaurant magnate.  In fact, if we use the search bar above the graph and refine our search into “El Torito Wolfe” we find from the first SEC filing in the results that indeed Real Mex Restaurants, Inc. is his holding company and that in 2005 he also acquired Chevy’s Restaurants. 

There you have it: how to scope out a company in just a couple of minutes with KYC3.  Due diligence done right … now.