SEC Charges Registered Representative with Causing Brokerage Firm's Failure to Timely File a Sar Concerning Suspicious Wires Surrounding an Acquisition Announcement

ADMINISTRATIVE PROCEEDING
File No. 3-21669

September 18, 2023 - The Securities and Exchange Commission today announced the institution of settled proceedings against Pierre Economacos, a registered representative at a registered broker-dealer. The SEC's order finds that Economacos failed to report suspicious and unusual transactions in a brokerage account of his long-time customer (the Customer) to the anti-money laundering (AML) group of the brokerage firm where Economacos worked, which caused the firm to fail to timely file a Suspicious Activity Report (SAR) in violation of the federal securities laws. Economacos agreed to pay $20,000 to settle the proceedings.

According to the SEC's order, Economacos complied with a request from the Customer to make a $50,000 wire transfer from the Customer's account to the brokerage account of the Customer's close relative (the Relative) at another brokerage firm, in order to loan the Relative money. Three days after the $50,000 wire, the company where a close relative of the Customer and Relative was a senior employee (the Executive) announced that it would be acquired, and its stock price increased by approximately 30%. Economacos knew that the Executive was a senior employee at the acquired company, and Economacos learned of the acquisition on the date the acquisition was announced. Within a week after the acquisition announcement, the Relative sent four wires totaling $280,000 back to the Customer's account from accounts of the Relative and two immediate family members, which the Relative controlled, at the other brokerage firm. These wire transactions were unusual in the context of the Customer's account history. For example, while the Customer had sent funds to the Relative's bank account in the past, the Customer had never sent funds to a brokerage account owned by the Relative and the Relative had never paid back to the Customer any of the several hundred thousand dollars that the Relative had borrowed from the Customer's brokerage accounts. The order finds that Economacos's failure to inform his firm's AML group about the suspicious nature of the transactions caused the firm to fail to timely file a SAR regarding the transactions in violation of Section 17(a) of the Exchange Act and Rule 17a-8 thereunder.

Without admitting or denying the SEC's findings, Economacos agreed to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Exchange Act and Rule 17a-8 thereunder and to pay a civil penalty of $20,000.

The SEC's investigation was conducted by John P. Mogg of the Division of Enforcement's Market Abuse Unit in the San Francisco Regional Office and supervised by Market Abuse Unit Assistant Regional Director Rahul Kolhatkar and Unit Chief Joseph G. Sansone.