The NASD has charged Las Vegas brokerage firm NevWest Securities Corp. and two of its top officers with violating its Anti-Money Laundering Rule.

NASD charges that the firm failed to adequately implement and enforce procedures to detect and report suspicious transactions that the firm had reason to suspect involved possible securities fraud. Specifically, the complaint charges that the firm failed to conduct adequate due diligence and file appropriate Suspicious Activity Reports in connection with highly suspicious transactions by a customer of the firm.

The NASD alleges that, during the relevant period, the customer opened 32 accounts at NevWest and sold more than 250 billion shares of a sub-penny stock, which generated total sales proceeds of over $53 million. NASD alleged that NevWest earned commission revenue on the sales totaling $2.5 million – 36% of the firm’s total revenues during the relevant period.

These allegations have not been proven. Under NASD rules, a firm or individual named in a complaint can file a response and request a hearing before an NASD disciplinary panel. Possible remedies include a fine, censure, suspension, or bar from the securities industry, disgorgement of gains associated with the violations, and payment of restitution.

“Suspicious Activity Reports provide law enforcement with information that’s critical for investigating and prosecuting money laundering, terrorist financing and other financial crimes,” said James Shorris, NASD executive vice president and head of enforcement. “Broker-dealers have an obligation to investigate ‘red flags’ indicating suspicious activity and, where appropriate, to file SARs. Despite a multitude of very obvious red flags, NevWest chose to look the other way, earning millions for itself in the process.”