NASD Hearing Panel Bars Broker for Evading Federal Currency Reporting Requirements
Washington, D.C. — NASD announced today that a NASD Hearing Panel barred Christian W. Baker, a Livonia, MI. registered representative, from the securities industry for structuring currency transactions in an effort to evade currency-reporting requirements and failing to file required Currency Transaction Reports (CTR).
On July 10, 2001, NASD filed a complaint against Baker alleging, among other things, that she violated NASD Rules by structuring currency transactions to evade federal reporting requirements and causing an NASD member firm to fail to file a CTR.
"It is imperative in today's world that the front lines of our industry adhere to procedures that may help identify transactions that may have dubious origins," said Mary L. Schapiro, NASD President of Regulatory Policy and Oversight. "As this action illustrates, we will identify and sanction those in our industry who try to circumvent these procedures."
Financial institutions, including broker-dealers, are required to report cash transactions of more than $10,000 to the federal government by filing a CTR. Federal law prohibits any person from structuring transactions or assisting in the structuring of transactions to evade reporting requirements. Federal law also prohibits any person from causing or attempting to cause a financial institution to fail to file CTRs.
The Hearing Panel, in its decision, found that Baker accepted $50,000 in cash from a customer who insisted that the transaction not be reported. After learning from a bank teller that reports were not required for cashier's checks issued in amounts of less than $3,000, Baker began to periodically exchange the customer's cash for cashier's checks in amounts of less than $3,000. The Panel found that over a four-month period, Baker purchased 24 separate cashier's checks in amounts of less than $3,000, eventually depositing the entire $50,000 that was being held in her desk drawer into the customer's account.
The Hearing Panel also found that Baker did not record the receipt of the $50,000 in cash, did not notify her employer or the U.S. Department of the Treasury that she had indeed received the cash, and failed to file the required CTR. Baker's failure to inform her employer of the transaction caused the firm, to in turn, fail to file the required CTR. The Panel also found that Baker structured the 24 purchases of cashier's checks for the express purpose of preventing her employer from complying with the reporting requirements.
The Panel noted in its decision that the currency reporting statute protects the taxing power of the U.S. Government, as well as inhibits the flow of cash to terrorist organizations. The Panel found that Baker's conduct undermined those purposes and those of the federal securities laws. In imposing the bar from associating with any NASD member, the Panel found that Baker's conduct was intentional and specifically designed to evade the reporting requirements mandated by federal law.
NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business -- from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information please visit www.nasd.com.