J.H. Darbie & Co., Inc.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25844 / September 22, 2023
Securities and Exchange Commission v. J.H. Darbie & Co., Inc., No. 1:22-civ-10482-JHR (S.D.N.Y. filed December 12, 2022)
SEC Obtains Final Judgment Against Brokerage Firm Charged with Anti-Money Laundering Violations
On September 13, 2023, the U.S. District Court for the Southern District of New York entered a final consent judgment against J.H. Darbie & Co., Inc., a New York City-based brokerage firm, in connection with its alleged failure to report suspicious activity related to transactions in tens of billions of shares of low-priced securities - or "penny stocks" - that were traded in over-the-counter markets.
To help detect potential securities law and money-laundering violations, broker-dealers are required to file Suspicious Activity Reports (SARs) describing suspicious transactions taking place through their firms. According to the SEC's complaint, filed on December 12, 2022, from at least January 2018 to January 2020, J.H. Darbie failed to investigate and file SARs for numerous suspicious transactions, even when the transactions raised red flags recognized in J.H Darbie's written anti-money laundering policies and procedures and in regulatory guidance.
Without admitting or denying the allegations of the SEC's complaint, J.H. Darbie consented to the entry of a final judgment permanently restraining and enjoining it from violating Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder, and ordering the firm to pay a civil penalty of $125,000 and to retain an independent anti-money laundering compliance consultant.
The SEC's litigation was conducted by Christopher Colorado, Victor Suthammanont, and Suzanne Bettis and was supervised by Thomas P. Smith, Jr., of the New York Regional Office. The SEC's investigation was conducted by Christine D. Ely, Ms. Bettis, and Alison Conn, with assistance from Daphne Downes, of the New York Regional Office, and was supervised by Mr. Smith. The SEC's examination that led to the investigation was conducted by Michael Altschuler, Stephanie Buonaguro, Linda Lettieri, and Eleni Stalzer, of the New York Regional Office.