On August 26, 2011, a FINRA arbitration panel ordered brokerage firm Wedbush Morgan Securities to pay an investor nearly $1.2 million as a result of stockbroker negligence and misconduct by Los Angeles-based Wedbush Morgan and one of Wedbush's brokers. The arbitrators also ordered Edward Wedbush, Wedbush Morgan's namesake and President, to pay the investor $200,000 for emotional distress. The arbitrators separately ordered the Wedbush broker to pay an additional $1.5 million to the investor.
This is one of a string of ten cases over the past year in which FINRA arbitrators have ordered Wedbush Morgan to compensate investors. During that time, FINRA arbitrators have ordered Wedbush Morgan to pay more than $5 million to investors who lost money as a result the misconduct of Wedbush Morgan or Wedbush Morgan brokers.
It appears that Wedbush Morgan refuses to pay reasonable amounts to investors in an effort to settle cases. Rather, Wedbush Morgan appears to gamble by leaving its fate in the hands of FINRA arbitrators, who far more often than not have ruled in favor of investors in recent cases. The brokerage firm appears to engage in this strategy even in the face of overwhelmingly bad facts. Fortunately for investors, arbitrators have been ready and willing to call Wedbush Morgan to task for violating investors' trust and confidence.
Wedbush Morgan's seeming willingness to ignore its obligations to its customers has resulted in millions of dollars of additional cases by customers who allege that they lost money as a result of Wedbush's recommendations and sales of fraudulent investments. Those cases have not yet been decided by arbitrators. Time will tell whether Wedbush's refusal to own up to its wrongdoing will work out in its favor. If history repeats itself, however, the FINRA arbitrators presiding over the cases will recognize Wedbush Morgan's home-office, high-level compliance and supervisory failures and they will order Wedbush Morgan to compensate the investors for their losses.
