Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker David Kyi (Kyi), previously associated with Sogotrade, Inc., has at least one disclosable event. These events include one tax lien, alleging that Kyi recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 17, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (‘Exchange Act’) against David Chong Kyi (‘Respondent’ or ‘Kyi’). \<char_lb_r>\, \<char_lb_r>\, The Commission finds that from at least May 2019 through October 2023 (the ‘Relevant Period’), SogoTrade, Inc. (‘SogoTrade’), a registered broker-dealer, failed to file Suspicious Activity Reports (‘SARs’) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (‘FinCEN’) when it knew, suspected, or had reason to suspect that its customers were facilitating illegal activity or engaging in activity with no business or apparent lawful purpose. Due to deficiencies in SogoTrade’s design and implementation of its Anti-Money Laundering (‘AML’) policies and procedures, SogoTrade repeatedly failed to investigate its customers’ engagement in suspicious activity and to file SARs when required. SogoTrade also failed to follow its written identity verification process and therefore failed to document accurately the procedures set forth in its Customer Identification Program (‘CIP’). \<char_lb_r>\, \<char_lb_r>\, At all relevant times, Kyi was SogoTrade’s AML Compliance Officer (‘AMLCO’), was primarily responsible for the design and implementation of SogoTrade’s AML program, and, until the firm’s establishment of a SAR Committee in December 2021, was solely responsible for deciding whether SogoTrade would investigate suspicious activity and whether it would file SARs. On numerous occasions, Kyi failed to investigate suspicious activity and failed to file SARs concerning suspicious activity that SogoTrade systems or personnel, or employees of SogoTrade’s clearing firm, brought to his attention. When Kyi did investigate suspicious activity, he applied an inappropriate standard to determine whether to file a SAR-whether the customer had in fact engaged in fraud or other illegal activity-rather than the standard laid out in the Bank Secrecy Act (‘BSA’) and implementing regulations. Kyi also had a practice of alerting customers that SogoTrade’s surveillance reports had identified their suspicious trading activity and would advise or direct employees to advise customers to keep their trading activities below the average daily volume threshold to avoid triggering firm review. Furthermore, Kyi failed to consistently and comprehensively review the firm’s AML surveillance reports. In addition, year-after-year during the Relevant Period, although it was his responsibility to do so under SogoTrade’s WSPs, Kyi failed to implement the firm’s independent AML auditor’s key recommendations to strengthen SogoTrade’s processes related to monitoring and investigation of suspicious activity. Finally, despite being responsible for implementing the firm’s AML WSPs, including its CIP, Kyi also failed to help ensure that SogoTrade adhered to its CIP procedures, which resulted in the firm’s failure to accurately document its CIP procedures.
