The SEC announced its first enforcement actioun under the USA Patriot Act, which requires broker-dealers to implement and document identity verification procedures for all new accounts. The SEC has sanctioned broker-dealer Crowell, Weedon & Co. for failing to properly document its customer identification program.
According to the SEC, Crowell, Weedon failed to document its actual customer identity verification procedures in its written customer identification program (CIP) from October 2003 to at least late April 2004. During this period, the firm opened approximately 2,900 new accounts for customers. In verifying the identities of those customers, Crowell, Weedon simply relied on its registered representatives' attestations that they had personal knowledge of the customers opening the new accounts. This practice was not documented in the firm's written CIP.
While not admitting or denying any of the SEC's findings, Crowell, Weedon consented to the issuance of a cease and desist order. The order prohibits any further violations of the USA Patriot Act.
Comment Preview