SEC brings first Patriot Act enforcement action against California brokerage firm

[JURIST] The US Securities and Exchange Commission (SEC) [official website; JURIST news archive] has brought its first enforcement action under the USA Patriot Act [DOJ materials; JURIST news archive] against Los Angeles brokerage firm Crowell, Weedon & Co. [corporate website], the largest independent investment firm in the western US. The SEC issued a cease-and-desist order [PDF text; press release] Monday against Crowell for failing to document its customer identification procedures for new accounts in accordance with the Patriot Act, but did not fine the company. Crowell settled the action without admitting or denying the charges.

The SEC claims that Crowell opened 2,900 new accounts from 2003-2004 by relying on brokers who simply vouched for the customer opening the account, contrary to the stated company policy requiring several different types of identity checks for each new customer - including searching public databases and reviewing official personal identification documents. Crowell said that it has now improved its procedures to accommodate Patriot Act requirements. The customer identification procedures are an important method to deterring money laundering that can be used by terrorist groups, according to Randall R. Lee, director of the SEC's Regional Pacific Office. AP has more. The Los Angeles Times has local coverage.

 

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