NEW YORK, Aug 5 (Reuters) - 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 said.
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 to Eydelman.
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 guilt.
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)