Investigation: Market Manipulation & AML Failures

They Deleted the Evidence. Ignored the Alerts. And Got Away With a Slap on the Wrist.

FINRA AWC No. 2022073322301 · Accepted April 2025

This is the story of two affiliated Wall Street firms, TradeUP Securities, Inc. (formerly Marsco Investment Corporation) and US Tiger Securities, Inc., both operating out of New York and both owned by the same offshore holding company. For years, they processed transactions in thinly traded, low-priced stocks through a network of foreign financial institution accounts, and their systems for catching potential fraud were, according to FINRA, not reasonably designed to do that job at all.

The violations span roughly four years, from January 2019 through June 2023. They cover three distinct categories of misconduct: broken anti-money laundering programs, a complete failure to vet high-risk foreign account holders, and the systematic destruction of business communications using a messaging app with automatic deletion built in.

FINRA fined the two firms a combined $950,000 (roughly the price of 19 median American homes, or what a minimum wage worker in New York would earn across 45 years of full-time work). Neither firm admitted wrongdoing.

The AML Programs Were Fake On Paper and Faker In Practice

Anti-money laundering programs exist for one reason: to catch financial crimes before they contaminate public markets. US Tiger and TradeUP built programs that looked like compliance on paper but were structurally incapable of catching anything. FINRA’s findings are blunt about this.

US Tiger’s written procedures stated that its clearing firm would review for suspicious activity and report red flags back to US Tiger. The problem: the clearing firm had never agreed to do that and simply did not do it. US Tiger also claimed it would obtain and review exception reports from its clearing firm to monitor customer trading. The firm received no such reports. The procedures listed red flags to watch for, then provided zero guidance on how to detect or investigate them.

Between November 2019 and December 2020, US Tiger relied on a manual scan of a daily trade blotter to catch fraud across all its accounts. A single blotter review cannot identify coordinated patterns across accounts or multiple days. That is exactly the kind of pattern that stock manipulation produces.

TradeUP Made It Worse at Scale

When US Tiger transferred its 15 foreign financial institution omnibus accounts to TradeUP in April 2021, TradeUP was already processing an average of 55,000 orders per day. It now also held 47 foreign affiliate omnibus accounts, all transacting in low-priced securities. The scale of the operation dwarfed the monitoring capacity the firm had built.

TradeUP did eventually implement automated spoofing and wash trade detection reports. Those reports generated so many false positives that the firm stopped reviewing them regularly. By February 2022, TradeUP sat on approximately 2,500 unreviewed spoofing alerts, then closed 1,200 of them in a single batch, some dating back eight months, without documenting a single investigation. The firm also bulk-closed over 380 wash trade alerts in a single day in January 2022, with 120 of those dating back to January 2021 or earlier.

Between April 2021 and June 2022, TradeUP performed zero AML review of any low-priced securities deposits into its foreign affiliate omnibus accounts. When the firm finally built its own internal surveillance reports in June 2022, the coding was wrong, producing inaccurate data on trade volume and stock transfer quantities.

They Rated Sanctioned-Adjacent Accounts as “Low Risk” and Did Nothing

The Bank Secrecy Act requires broker-dealers to run formal due diligence programs on correspondent accounts held by foreign financial institutions. The entire point is to prevent foreign money laundering operations from routing dirty money through U.S. markets. Both TradeUP and US Tiger failed this requirement completely.

US Tiger’s written procedures explicitly stated that the firm did not have and did not intend to open any correspondent accounts for foreign financial institutions. This was factually false. The firm carried 15 such accounts during the relevant period. More damning: US Tiger designated three accounts held by a foreign financial institution that had already received a formal warning from its own local regulator for AML deficiencies as “low-risk.”

TradeUP inherited all 15 of those accounts plus added 32 more, building a portfolio of 47 foreign affiliate omnibus accounts. Some of those accounts included customers who were other foreign financial institutions, offshore banks, money service businesses, and politically exposed persons. TradeUP did not assess the risk posed by any of these accounts until early 2023, at which point it finally rated them “high-risk.” Then it implemented no additional risk controls specific to those accounts.

They Deleted Their Own Messages for Three Years and Called It a Platform Feature

Between January 2019 and November 2021, the parent company of both TradeUP and US Tiger provided all employees across both firms and their foreign affiliates with an internal messaging and document-sharing platform. Employees used this platform for back-office operations, communications between the two broker-dealers, and communications with foreign affiliate customers. The platform had an automatic message deletion feature that wiped communications within weeks of them being sent.

Federal law requires broker-dealers to retain all business communications for three years. Both firms knew about this platform, provided it to employees, and allowed it to be used for firm business. Neither firm wrote a single policy about how the platform could be used. Neither firm reviewed any communications made through it. Neither firm took any action to archive or preserve any message before it was automatically deleted. The regulatory clock was running for three years while messages vanished on a rolling basis.

Both firms stopped using the platform in November 2021, which is also when FINRA’s investigation began to heat up. The communications are gone.

The Non-Financial Ledger: Who Actually Pays When Wall Street Ignores Fraud

Every time a broker-dealer ignores a manipulation alert, a real person on the other side of that trade takes the loss. The financial press covers these settlements as bureaucratic line items, regulatory housekeeping. The actual harm moves through the market invisibly, absorbed by retail investors, pension funds, and ordinary people who trusted that the markets they put their savings into were being watched by professionals paid specifically to watch them.

Spoofing works by creating a false impression of supply and demand. A trader places large buy orders to push prices up, then cancels those orders and sells into the inflated price. The people who bought at that inflated price, believing the market was genuinely moving, get left holding shares worth less than what they paid. TradeUP received 2,500 alerts specifically flagging this behavior. The firm closed 1,200 of them in a single afternoon. Every one of those alerts represented a pattern that warranted a human being looking at it and asking: who is getting hurt right now?

The foreign affiliate omnibus accounts at the center of this case held shares for customers who were themselves other foreign financial institutions, offshore banks, money service businesses, and politically exposed persons. These are not casual retail investors. These categories of account holders exist in the AML regulatory framework precisely because they have historically been conduits for money laundering, bribery, and fraud. When TradeUP accepted nearly 100 deposits totaling more than three million shares of a single low-priced security from twelve different foreign affiliate accounts, without conducting a single AML review, those shares had to end up somewhere. They got sold. Someone bought them. The firm that was supposed to be watching was not watching.

The three million shares came from a company that had recently changed both its name and its business model, which is a documented red flag for “pump and dump” schemes, and was already the subject of active shareholder fraud litigation. FINRA had explicitly published guidance calling this exact pattern a red flag. The firms had access to that guidance. They had access to alerts. They had access to the depositor’s identity. They chose not to connect those dots, and the market absorbed the cost of that choice while the firms collected transaction fees.

The destruction of business communications across three years is a separate and deeply corrosive harm. When broker-dealers erase the record of their own internal operations, regulators and prosecutors lose the ability to trace decisions back to the people who made them. Accountability becomes structurally impossible. The people who ordered trades, approved account openings, dismissed alerts, or communicated instructions to foreign affiliates did so on a platform everyone knew would delete the evidence. Whether that was intentional or negligent, the practical outcome is the same: a clean slate.

The $950,000 (enough for a modest down payment on about 19 American homes, or roughly four times what the median American household earns in a year) fine resolves all of this. The firms admitted nothing. The communications are gone. The accounts have since been re-rated as high-risk, but the period during which those accounts transacted freely, without oversight, is sealed and unreviewable by definition.

Legal Receipts: The Exact Words FINRA Used to Describe This

Societal Impact Mapping: Who Else Gets Hurt

Public Health of the Financial System

Markets function on the assumption that watchdogs are watching. When retail investors, retirees, or ordinary people put money into public markets, they operate on the belief that brokers are required to monitor for manipulation and that regulators enforce those requirements. This case documents four years of that assumption being false. The AML failures at both firms were structural and sustained, not accidental lapses.

Spoofing and wash trading distort price signals across public markets. When prices are moved artificially, capital allocation decisions, from individual investment choices to institutional portfolio rebalancing, are made on false data. The damage is diffuse but real. It erodes the informational integrity of the markets that millions of Americans depend on for retirement savings, college funds, and basic wealth-building.

The three million shares deposited from fraud-adjacent accounts into TradeUP’s system without AML review represent a direct injection of potentially tainted financial activity into public markets. The source company was already under shareholder fraud litigation. FINRA’s own guidance flagged the exact pattern: name change, business model pivot, concentrated deposits from multiple accounts. TradeUP moved the shares anyway.

Economic Inequality

The accounts at the center of this case were omnibus accounts held by foreign financial institutions, offshore banks, money service businesses, and politically exposed persons. These are structures that require sophisticated legal and financial infrastructure to establish and maintain. They are not accessible to ordinary investors. The people most able to exploit lax oversight are the people who already have the most capital and the most access to complex financial architecture.

The $950,000 (equal to roughly two full years of salary for 20 average American workers) fine imposes no meaningful financial pain on firms that operated for years generating transaction fees across tens of millions of orders. The fine is a cost of doing business, not a deterrent. TradeUP processed 55,000 orders per day on average. At even a fraction of a cent per order in revenue, the fine covers days of operation.

Meanwhile, the retail investors who bought shares that sophisticated foreign accounts were unloading have no recourse through this settlement. They are not named. They are not compensated. FINRA’s action resolves the firms’ regulatory exposure, not the harm to the people on the other side of the trades. Economic inequality in financial markets is not just about income; it is about who bears the risk when the rules are broken and who gets made whole when regulators finally show up.

The Cost of Looking Away

What Now: The People, The Regulators, and The Next Step

Corporate Leadership on Record

The AWC was signed on behalf of both firms by Guanwu (Jack) Ye, identified as CCO (Chief Compliance Officer) for both TradeUP Securities, Inc. and US Tiger Securities, Inc., on April 22, 2025. Both firms are owned by the same unnamed offshore holding company. [REDACTED – Not in Source] regarding individual executive accountability beyond the CCO signatory.

Regulatory Watchlist

• FINRA (Financial Industry Regulatory Authority): Primary enforcer in this case. Track both firms on FINRA BrokerCheck at finra.org/brokercheck.
• FinCEN (Financial Crimes Enforcement Network): The agency that receives Suspicious Activity Reports. Both firms were required to file SARs and failed to do so adequately for years.
• SEC (Securities and Exchange Commission): TradeUP and US Tiger operate under Exchange Act rules. The SEC can pursue independent action.
• DOJ (Department of Justice): Money laundering and securities manipulation carry criminal penalties. Civil settlements with FINRA do not preclude DOJ action.
• The Independent Consultant: TradeUP is required to hire one within 90 days of acceptance. Their report to FINRA is a public accountability checkpoint. Demand transparency.

What You Can Actually Do

Check any brokerage account you hold against FINRA’s BrokerCheck database at finra.org/brokercheck. If you believe you were on the losing side of a manipulated trade, contact a securities attorney and file a tip with FINRA directly at finra.org/investors/have-problem. Support local mutual aid networks and community investment cooperatives that build financial infrastructure outside the systems these firms operate in. Regulatory agencies respond to volume: the more people who formally report concerns, the harder it becomes to settle for a fine and move on.