SEC Fines Velox Clearing $500,000 for SAR Failures

The U.S. Securities and Exchange Commission (SEC) has imposed a $500,000 penalty on California-based broker-dealer Velox Clearing LLC for deficiencies in its anti-money laundering (AML) compliance, specifically related to the failure to file Suspicious Activity Reports (SARs) as required by federal law.

According to the SEC‘s order, from July 2019 to December 2022, Velox failed to develop and enforce a reasonable AML program tailored to its risk profile. The firm’s written policies lacked several key risk indicators identified in regulatory guidance. These included, among others, unusual activity through omnibus accounts at foreign institutions and client trading that disproportionately influenced market volume.

Even where red flags were mentioned in its internal documentation, the firm failed to act on them. The SEC noted that Velox did not properly investigate matched trading patterns or other forms of potentially manipulative conduct, despite having these activities identified in its own compliance materials.

The SEC determined that Velox willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8, which governs the obligation to implement AML programs and file SARs. Without admitting or denying the findings, Velox consented to a cease-and-desist order, a formal censure, and the financial penalty.