FINRA Warns of Potential China Trading Schemes

Posted on February 10th, 2021 at 3:07 PM
FINRA Warns of Potential China Trading Schemes

From the Desk of Jim Eccleston at Eccleston Law LLC:

The Financial Industry Regulatory Authority (FINRA) warned of emerging stock-trading schemes executed by foreign entities. FINRA has seen potential manipulation schemes involving accounts placing “multiple similar limit orders” on the U.S. stock exchange-listed stocks in restricted overseas markets, specifically China. FINRA observed that the owners of the accounts may be acting under the direction of others.

The trading schemes carry high risks that typically begin when numerous non-U.S. customers open accounts through a single advisor or a small team of advisors, often funding their accounts from the same foreign entity. The compliance costs of dealing with these foreign accounts often can outweigh the benefits.

The high risks schemes can carry some of the most onerous regulatory consequences and fall under the purview of three regulators—FINRA, the SEC, and the U.S. Treasury Department’s Financial Crimes Enforcement Network, which can amplify any potential penalties.

FINRA’s warning falls under a firm’s obligation to have an effective anti-money laundering (AML) and financial crimes compliance program. Non-U.S. activity and accounts are subject to greater regulatory scrutiny because they present greater risks and are harder for U.S. regulators to monitor. Firms need to recognize that those types of accounts carry significant risks.

Eccleston Law LLC represents financial advisors nationwide. Please contact us to discuss any issues that you may have.


Tags: eccleston, eccleston law, finra, trading schemes, china

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I learned two important things working with Eccleston Law. First, I made a friend and ally with Jim and Steph for life. Secondly, and this is a crucial life lesson - if you need counsel, then seek out the very best. Jim was referred to me by a most trusted source. I've never had to hire an attorney for anything. Now, I know the value of hiring an important partner. Meticulous, thorough and detailed in preparation is the best way to describe Jim. Brilliant too, I might add. Bottom line, I would highly highly recommend Jim and Stephany for your legal needs. One of the best life decisions I've ever made.

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