The SEC settled charges against broker-dealers Chardan Capital Markets and Industrial and Commercial Bank of China Financial Services (ICBCFS) for failing to report suspicious sales of billions of penny stock shares. According to the SEC, from October 2013 to June 2014, Chardan liquidated more than 12.5 billion penny stock shares for seven of its customers and ICBCFS cleared the transactions, while Chardan failed to file any suspicious activity reports (SARs), even though the transactions raised red flags. The SEC found that ICBCFS similarly failed to file any SARs for the transactions, despite ultimately prohibiting trading in penny stocks by some of the seven customers.
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