Securities Law Blog

The Securities and Exchange Commission recently charged E*Trade Clearing LLC and E*Trade Securities LLC (collectively, E*Trade) for failing to comply with an anti-money laundering rule that requires broker-dealers to verify the identities of their customers and document their procedures for doing so. The SEC's order finds that E*Trade failed to accurately document certain Customer Identification Program (CIP) practices and verify the identities of more than 65,000 of its customers as required by the USA PATRIOT Act and SEC rules. E*Trade agreed to settle the SEC's enforcement action without admitting or denying the allegations, and will pay $1 million in financial penalties.

"E*Trade is one of the largest online brokerage firms in the world, and a compliance lapse of this type has the potential to undermine the nation's anti-terrorism and anti-money laundering efforts," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "The penalty and undertakings imposed in today's enforcement action reflect the critical nature of anti-money laundering rules, and will provide greater assurance that future compliance will be seriously and continuously monitored."

The SEC Release can be found at : http://www.sec.gov/news/press/2008/2008-156.htm

For more information on this subject contact securities attorneys, Michaels, Ward & Rabinovitz, LLP.