On May 20, 2026, FINRA announced more than $1.1 million in fines against two member firms for anti-money laundering and supervisory failures tied to low-priced securities. The two firms run very different businesses, but FINRA's findings describe the same weakness: surveillance that could not keep pace with the risk the firm had taken on.
FINRA's Head of Enforcement, Bill St. Louis, put it plainly: "Blue Ocean's and Pictet's monitoring systems were inadequate given their customers' low-priced securities trading." Both firms consented to the findings without admitting or denying them.
Pictet Overseas: $610,000
From February 2022 to March 2023, Pictet executed about $300 million in low-priced securities transactions, involving more than 150 million shares. More than 70% of that activity came through an omnibus account held by the firm's foreign financial institution affiliate. According to FINRA:
- Until February 2023 the firm relied on manually compiled daily reports that could not effectively identify suspicious patterns.
- It missed red flags such as customer trading that made up a significant share of daily market volume, in some cases more than 20% on a single day.
- It had no reasonably designed due diligence program for its foreign financial institution account, including no periodic reviews of the account's activity.
- Another regulator had warned the firm about its AML program in June 2021, and FINRA found the firm did not take timely corrective action.
Blue Ocean ATS: $550,000
Blue Ocean, an alternative trading system that has handled 95% of overnight trading volume since it launched, was fined for failing since at least January 2023 to run an AML program tailored to its risks. Its monitoring consisted mainly of one employee manually reviewing a wash sale report and a low-priced securities report, and the firm ran no surveillance at all for spoofing, layering or other manipulative order patterns. FINRA required Blue Ocean to certify that it has fixed the deficiencies.
The common thread
Neither firm lacked data. What they lacked was a way to turn it into alerts a person could act on. A daily report reviewed by hand, or a single reviewer working through spreadsheets, cannot spot a customer whose trading quietly grows to a fifth of a stock's daily volume, or orders that are entered and cancelled in a pattern. As volumes rise, the gap between what the firm processes and what compliance can see only widens.
What firms should do now
- Match surveillance to the business: if the firm trades low-priced or thinly traded securities, its rules must cover concentration of volume, deposits and liquidations, and manipulative order patterns.
- Replace manually compiled reports with automated, risk-based alerts, and document the reasoning behind each threshold.
- Apply enhanced, periodic due diligence to foreign financial institution and omnibus accounts.
- Treat any regulator's warning as a project with an owner, a deadline and evidence of the fix.
- Staff to the volume: no single reviewer should be the firm's entire AML program.
Catalyst was built to close exactly this gap. Its rules engine turns trade and money-movement data into risk-based alerts for AML and trade surveillance, customer risk ratings drive tighter monitoring of high-risk accounts, and its dashboards and case management show supervisors what is open, who is reviewing it and what was decided, with a full audit trail for regulators.
About FinWebTech
FinWebTech is a Service as a Software (SaaS) company developing compliance automation applications for the financial services industry. Its flagship product, Catalyst, provides automated AML and trade surveillance, customer risk rating, supervisory controls and task management, trade blotter management, case management, reporting and a document library. Catalyst was designed by an industry experienced Chief Compliance Officer, for compliance.
For more information on FinWebTech and Catalyst, please contact Don Lee at don.lee@finwebtech.com or 1-800-980-0959.
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