SEC Finds Compliance Failures at Sixteen Brokers Trading Microcaps, Fines E*Trade

By Kira Zalan and Colby Adams

A majority of the brokers examined by the U.S. Securities and Exchange Commission (SEC) as part of an inquiry into the sale of low-priced stocks were found to have serious compliance deficiencies, the agency said Thursday. In an advisory, the SEC said that most of the 22 brokerages investigated in a "targeted sweep" of the microcap stock industry had inadequate compliance programs in place to trigger reviews of unregistered securities sales and file suspicious activity reports when warranted. Separately on Thursday, the SEC announced an enforcement action against current and former subsidiaries of E*Trade Financial Corporation for improperly conducting unregistered...