CMKM Diamonds Inc. (fka CMKX)

[Mark_Leh]

Okay, that's interesting. Are the accounts still frozen? Was money-laundering alleged?

The thing that caught my attention about this was that the NASD was so upset about a SAR violation. Filing a SAR is a judgment call. If there was no money-laundering, then NevWest made the right call. If not, then that should have been (or should eventually be) specified. The SAR violation liability is in there to give the NASD a catch-all to go after B/D's when they can't determine and they'll never be able to determine whether a crime was committed (which sometimes happens with funding of terrorist organizations) or when the B/D was privy to a crime (which sometimes happens with securities fraud).

One of the other claims was "failure to supervise". This is what nails most B/D's when something goes wrong. The NASD may not be able to prove the heavy-duty stuff, but they can usually prove "failure to supervise".