| NEW YORK
NEW YORK Aug 5 Three U.S. regulators have told
Oppenheimer Holdings they are investigating the
broker-dealer over issues related to money laundering, penny
stock sales and failure to supervise a former broker, the firm
In an Aug. 1 regulatory filing, Oppenheimer said the
Financial Industry Regulatory Authority sent it a "Wells Notice"
asking why the firm should not be charged with rule violations
related to supervision, record keeping and late filing of
reports on an unnamed "former financial adviser."
In March, the U.S. Securities and Exchange Commission and
the Justice Department charged Vladimir Eydelman with securities
fraud for trading in undisclosed merger deals and tender offers.
Eydelman had worked for more than a decade at Oppenheimer in New
York City, before leaving in 2012 to join Morgan Stanley.
Oppenheimer said it has not yet responded to the so-called
Wells Notice that FINRA sent in May, but "is cooperating with
the investigating entities."
Spokespeople at FINRA and an Oppenheimer spokesman did not
respond to requests for comment as to whether the probe relates
Oppenheimer, which employs about 1,400 retail stockbrokers,
also said in its quarterly report that it expects the SEC and
FinCEN to "file one or more enforcement actions" against the
firm related to sale of low-priced securities, or penny stocks,
by its brokers between August 2008 and September 2010.
FinCEN is a division of the U.S. Treasury Department that
investigates money-laundering violations.
Oppenheimer paid FINRA $1.43 million a year ago to settle
charges that its policies and procedures relating to penny-stock
sales were deficient, though it neither admitted nor denied
In an earlier response to the SEC about its three-year-long
investigation of such sales, Oppenheimer said the probe was
"largely duplicative" of the matter settled with FINRA. However,
the firm put aside $12 million in this year's second quarter to
cover the expected charges from the SEC and FINRA.
The reserve led Oppenheimer to report a quarterly loss of
$1.6 million last week.
Oppenheimer also said in its filing that for several
quarters it has been cooperating with FINRA on a probe of some
brokers' sales of leveraged and inverse exchange-traded funds.
Several employees have testified in relation to the
investigation, Oppenheimer said.
(Reporting by Jed Horowitz; Editing by Dan Grebler)