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Federal Regulators have sued a Salt Lake City stock brokerage, alleging that it failed to report transactions it had flagged as suspicious and that were used in so-called "pump and dump" schemes, including "hundreds of instances" in which its customers had prior or ongoing fraud charges.
In a complaint filed in federal court in New York, the Securities and Exchange Commission said Alpine Securities Corp. did not file so-called suspicious activity reports (SAR) that are supposed to flag unusual or suspicious trading activities.
Instead, according to the complaint filed Monday, the company omitted at least 1,950 instances of "red-flag" information it was required to report. The omissions included whether the securities issuer had a criminal or regulatory history.
In about 1,900 instances, it did not address a subsequent "dump," the liquidation or transfer of funds by the issuer, the complaint says.
"As alleged in our complaint, by failing to file SARs, Alpine Securities deprived regulators and law enforcement of critically important information often related to trades in microcap securities used to investigate potentially serious misconduct," said Julie Lutz, director of the SEC's Denver regional office, said in a news release.
An email to the company's offices and an evening voicemail seeking a response to the allegations were not returned Monday.
According to the complaint, the majority of Alpine Securities' business involves clearing stock transactions for other companies.
The company has a history of disciplinary actions brought by the Financial Industry Regulatory Authority, including participation in unregistered securities offerings, it says.
The company was purchased in 2011 by John Joseph Hurry, who also owns Scottsdale Capital Advisors, which brought most of the business to Alpine.
Scottsdale itself was in regulatory hot water in 2011 for not filing accurate and complete suspicious activities reports.
"Many of Scottsdale and Alpine customers have been charged with violation of the federal securities laws, including violations related to transactions that cleared through Alpine," the complaint states.
The SEC is asking the court to find that Alpine committed violations of U.S. securities laws, to issue an injunction from further violations and for fines with the amounts to be determined later.