Suspicious movements in several normally illiquid stocks raised red flags at FINRA as early as 2005, eventually getting the brokerage firm at the center of the trades shut down over a dismal $300,000 in commissions.
AIS Financial of Westlake Village, California, has been expelled from the industry for "turning a blind eye" to several customers -- some with known records for securities fraud and money laundering -- who moved billions of very low-priced shares onto its platform and then dumped them at a profit.
FINRA determined that the trades were extraordinarily lucrative for the clients but represented fairly pitiful margins for AIS. One Costa Rica-based client booked about $3 million trading various stocks, but AIS only made $53,000 on the account.
Another group of clients raked in roughly $5 million trading a now-extremely-illiquid bulletin board stock. AIS posted $243,000 in commissions on the trades.
Given the ongoing crackdown on penny stock manipulation throughout the industry, this was perhaps inevitable. Undoubtedly a lot more ahead.