FINRA Fines Pictet Overseas and Blue Ocean ATS Over Low-Priced Securities Controls

FINRA said on 20 May that it fined Pictet Overseas Inc. and Blue Ocean ATS a combined total of more than $1.1 million for anti-money laundering and supervisory violations involving low-priced securities transactions.

Pictet Overseas was fined $610,000 for violations tied to low-priced securities activity, much of it through an omnibus account held by a foreign affiliate. FINRA said Pictet executed about $300 million of low-priced securities transactions from February 2022 to March 2023, including nearly $30 million of over-the-counter securities.

FINRA also said Blue Ocean ATS had been fined $550,000 for similar violations. The regulator said Blue Ocean handled 95% of all overnight trading volume since its inception, including substantial low-priced securities volume, and ordered the firm to certify remediation of its AML compliance program.

Why it matters

Low-priced securities can be vulnerable to manipulation because they often trade with thin liquidity, high volatility and limited public information. For traders, weak broker-dealer or ATS surveillance can increase the risk of suspicious activity around overnight sessions and OTC names.

The case also shows FINRA’s focus on whether compliance systems scale with business model changes. Manual reviews and generic controls may not be enough when a venue or broker handles concentrated activity in higher-risk securities.

What to watch next

Watch whether FINRA brings more cases against firms with overnight, low-priced or OTC trading flows. Traders should also watch how ATS operators describe surveillance improvements, especially around spoofing, layering, wash sales and unusual volume concentration.