In the latest example of regulators' growing tendency to focus on compliance officers, the U.S. Securities and Exchange Commission has accused two former COs of aiding and abetting anti-money laundering violations at New York brokerage firm Aegis Capital Corp.

The SEC last week also cited the company and its CEO in cease and desist orders, while Aegis agreed to hire an independent compliance consultant to oversee reforms.

One compliance officer, Kevin McKenna, 61, reached a settlement in which he agreed to pay a $20,000 civil penalty without admitting or denying guilt. The SEC barred him for at least 18 months from serving in a compliance or anti-money laundering role in the securities industry. He served as Aegis' anti-money laundering compliance officer from June 2012 to mid-2013.

The SEC said McKenna failed to file required suspicious activity reports when Aegis' own procedures covering low-priced securities called for them. It said he also failed to file the reports even after a clearing firm sent red flag alerts citing some transactions as suspicious.

McKenna, who still works in Aegis' operations department, referred questions to Michael Ference, the attorney for Aegis.

Ference, of Sichenzia Ross Ference Kesner in New York, issued this statement: “The referenced activity occurred more than 4 years ago, related to only seven DVP [Delivery Versus Payment] accounts, and resulted in no harm to any Aegis clients. Aegis has long since exited this business line, and the brokers involved are no longer with the Firm. Aegis is pleased to have satisfactorily resolved this legacy matter.”

The SEC said the second CO, Eugene Terracciano, 55, will face an administrative hearing over similar charges. Terracciano served as Aegis' anti-money laundering compliance officer for two years starting in September 2013. He is no longer employed there, Ference said, and could not be reached for comment.

The SEC alleged that Terracciano failed to file suspicious activity reports on hundreds of transactions when he “knew, suspected, or had reason to suspect that the transactions involved the use of the broker-dealer to facilitate fraudulent activity or had no business or apparent lawful purpose. Many of the transactions involved red flags of potential market manipulation.” Terracciano could not be reached for comment.

In addition, on March 28 Aegis was fined a combined $1.3 million after the firm admitted it failed to file the required reports on hundreds of suspicious transactions. Aegis was fined $750,000 by the SEC and $550,000 by the Financial Industry Regulatory Authority.

The SEC said Aegis “willfully violated” the Securities Exchange Act of 1934 as well as the Investment Advisers Act of 1940.

FINRA said Aegis failed “to have adequate supervisory and anti-money laundering programs tailored to detect 'red flags' or suspicious activity connected to its sale of low-priced securities.”

As part of its SEC settlement, Aegis agreed to hire an independent compliance consultant to review its anti-money laundering policies and procedures. The company has 60 days to implement the consultant's recommendations.

The consultant will review Aegis again in 180 days and then one year after the order to ensure that the company remains compliant.

In another action on March 28, the SEC accused Robert Eide, 65, the founder and CEO of Aegis, of being “a cause” of the anti-money laundering violations.

The SEC action said “throughout the relevant period, Eide learned of some of the red flags associated with Aegis' low-priced securities business” but said he didn't take adequate action to ensure that the firm filed required reports.

Eide, who neither admitted nor denied the SEC findings, agreed to pay a $40,000 civil penalty to the SEC.