“From September 2019 to October 2023, Redbridge failed to establish and implement an anti-money laundering (AML) compliance program reasonably designed to detect and cause the reporting of suspicious transactions by the firm’s customers”

💡 This shows the firm operated for four full years without basic money laundering protections in place.

“The majority of the firm’s customers were retail customers located in high-risk money laundering jurisdictions, including China. Many of those customers regularly bought and sold shares of low-priced securities and some customers were introduced to the firm by issuers or otherwise had financial connections to the issuers of the securities they purchased.”

💡 Redbridge knew its customers presented elevated risks but failed to implement proportional safeguards.

“The firm’s written procedures did not reasonably address how the firm would detect or investigate red flags. They also failed to identify the specific alerts and reports used by the firm to identify potentially suspicious transactions, and they did not describe how such alerts or reports should be utilized by the firm’s AML analysts.”

💡 Even on paper, Redbridge lacked basic guidance for compliance staff to do their jobs properly.

“Although the firm used alerts to identify high-volume trading and certain kinds of wash trades, it did not have any automated method to identify other types of suspicious activity that could suggest market manipulation, including cross trading, layering, spoofing or other types of coordinated trading until September 2022.”

💡 For three years, the firm was blind to common manipulation techniques that automated systems should easily detect.

“Even when the firm’s analysts identified potentially suspicious activity, the firm often only restricted trading in the individual security at issue and did not investigate further trading by the same customer.”

💡 Redbridge took the bare minimum action without examining whether customers were running broader schemes.

“Although many of the trades triggered the firm’s alerts, including its alerts for wash trades, the firm closed the alerts with observations such as ‘client was selling now appears to be buying,’ without conducting a reasonable review of the trading.”

💡 Staff documented suspicious activity but closed alerts with meaningless comments instead of investigating.

“A customer investing in Issuer B, who opened his account in February 2021, stated at account opening that his annual income was $300,000 or less and his liquid net worth was $200,000 or less. However, approximately a year later, the customer deposited more than 1.6 million shares of Issuer B worth more than $2.7 million into his Redbridge account, and in the month following the deposit, the customer sent five outgoing wires totaling $2.5 million.”

💡 This massive discrepancy between claimed wealth and actual trading should have triggered immediate investigation.

“Although the firm collected customer’s physical address and Internet Protocol (IP) address as part of its Customer Identification Program (CIP) and AML processes, none of the alerts or exception reports utilized by the firm identified instances when customers were trading from the same physical or IP address.”

💡 Redbridge gathered information that could reveal coordinated schemes but never analyzed it.

“The firm also failed to reasonably investigate that each of the customers subsequently transferred shares of the issuer to the same account at a Hong Kong broker-dealer and provided Redbridge with identical reasons for these transfers.”

💡 Multiple customers giving identical explanations for identical transfers is a glaring red flag that went uninvestigated.

“In addition, the firm failed to perform any independent testing during the calendar year 2021.”

💡 Redbridge completely skipped mandatory annual oversight of its already inadequate AML program.

“The firm did not have staff reasonably trained to investigate activity flagged by alerts related to high-volume trading or potential cross trading, or to consider whether such activity required the filing of a SAR.”

💡 Compliance staff lacked basic training to determine when suspicious activity reports were legally required.

“From September 2019 to October 2023, Redbridge’s written supervisory procedures (WSPs) prohibited certain potentially manipulative transactions and practices such as prearranged trading and wash or cross transactions. But the WSPs did not directly address market manipulation and the firm’s supervisory system was not reasonably designed to detect and address red flags of potentially manipulative trading.”

💡 Having rules on paper means nothing when the firm lacks systems to detect violations.

“From September 2019 to October 2022, the firm’s CIP procedures were not reasonably tailored to its customer base. The firm failed to reasonably assess the identity verification risks posed by opening accounts for customers domiciled in China, many of whom had known connections to the issuers.”

💡 Customer identification procedures must match the risk profile, which Redbridge ignored for three years.

“This AWC is submitted on the condition that, if accepted, FINRA will not bring any future actions against Respondent alleging violations based on the same factual findings described in this AWC.”

💡 The settlement prevents future charges for these violations but does not require admission of wrongdoing.

“Redbridge specifically and voluntarily waives any right to claim an inability to pay, now or at any time after the execution of this AWC, the monetary sanction imposed in this matter.”

💡 The firm cannot later argue it cannot afford the fine, confirming it has the resources to pay.