The Financial Industry Regulatory Authority (FINRA) has filed a disciplinary complaint against Los Angeles-based brokerage firm Wedbush Securities Inc. alleging systemic supervisory and anti-money laundering (AML) violations. This is the latest in a long line of securities violations that have been alleged against Wedbush.
Wedbush has been one of the securities industry’s largest market access providers, providing trading access to trading firms. The firm generates millions of dollars per year in revenue from its market access business.
FINRA has alleged that from January 2008 through August 2013, Wedbush failed to have proper risk management controls and supervisory systems and procedures in place to oversee this business. According to FINRA, this allowed Wedbush’s market access customers to make thousands of potentially manipulative trades. Rather than meet its obligations to monitor, review, and detect potentially manipulative trades, Wedbush allegedly largely relied on its customers to self-monitor and self-report manipulative trading.
In what seems to be a pattern for Wedbush, the firm ignored numerous notices and warnings from FINRA. Despite the notices and warnings, Wedbush failed to put in place risk management and supervisory systems designed to identify and prevent manipulative trading. To the contrary, Wedbush arguably encouraged the lack of oversight by compensating employees based on market access customer trading volume. FINRA also has accused Wedbush of failing to establish, maintain and enforce adequate anti-money-laundering policies and procedures, and failing to report suspicious and potentially manipulative transactions.
Wedbush is permitted to file a response to the complaint and request a hearing before a FINRA disciplinary panel. If FINRA proves its allegations, it could fine, censure, suspend, or bar Wedbush from the securities industry.
Our securities lawyers at Dimond Kaplan & Rothstein, P.A. have represented numerous Wedbush customers in FINRA arbitration proceedings. We have successfully recovered money that our clients have lost as a result of various legal and regulatory violations by Wedbush. We are surprised that securities regulators continue to let Wedbush Securities remain in business and generate millions upon millions of dollars in profits, all while repeatedly ignoring and violating its legal and regulatory obligations.