Herold & Lantern Investments, Inc.

Herold & Lantern Investments, Inc. was fined $125,000 for failing to establish and implement an anti-money laundering (AML) compliance program reasonably designed to detect and cause the reporting of suspicious transactions in low-priced securities.

The findings stated that while the firm’s AML procedures identified red flags involving low priced securities, the procedures did not provide reasonable guidance regarding how to investigate red flags involving low-priced securities.

In addition, the firm did not reasonably tailor its AML compliance program to address the risks posed by low-priced securities. In practice, the firm did not conduct ongoing or additional due diligence of the accounts that regularly transacted in low-priced securities.

The firm’s exception reports also failed to include sufficient information to identify potential red flags of suspicious activity, such as patterns of account activity over time by the same customer. As a result, the firm failed to detect and reasonably investigate certain red flags of suspicious transactions.