SEC Charges Registered Broker-Dealer GTS Securities, LLC with Failing to File Suspicious Activity Reports

ADMINISTRATIVE PROCEEDING
File No. 3-22415

January 14, 2025 - The Securities and Exchange Commission today announced settled charges against GTS Securities, LLC (GTS), a registered broker-dealer, for failing to file Suspicious Activity Reports (SARs) in connection with its over-the-counter (OTC) market making business.

Broker-dealers like GTS are required to file SARs identifying suspicious transactions conducted through their firms to assist regulators and law enforcement in the detection and investigation of potential securities law violations. The OTC market, and microcap and penny stocks in particular, can be especially susceptible to manipulation and other schemes, and broker-dealers serve as critical gatekeepers. The SEC's order finds that, from the May 2019 launch of its OTC market making business through July 2020, GTS failed to maintain an anti-money laundering (AML) surveillance program that was reasonably designed to detect, investigate, and report suspicious OTC trading activity. As a result, according to the SEC's order, GTS did not file any SARs during this period, a period for which GTS was one of the most active broker-dealers in the OTC market while trading mostly penny stocks valued at less than $1 per share.

The SEC's order finds that GTS willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder. Without admitting or denying the SEC's findings, GTS agreed to a censure and a cease-and-desist order and to pay a civil money penalty of $350,000.

The SEC's investigation was conducted by Samuel M. Kalar, David Stoelting, and Tian Wen, under the supervision of Celeste A. Chase and Tejal D. Shah, of the New York Regional Office. The SEC examination that led to the investigation was conducted by Edward Janowsky, Stephen DeBella, and David Jaffe, under the supervision of Steven Vitulano, also of the New York Regional Office.