We previously reported that the Financial Industry Regulatory Authority (“FINRA”) has accused Los Angeles brokerage firm Wedbush Securities of securities law violations. This Summer, the U.S. Securities and Exchange Commission (“SEC”) charged Wedbush with the same misconduct. Specifically, the SEC charged Wedbush and two of its officers with failing to have adequate risk controls in place before providing customers with market access.
Wedbush consistently is one of the five largest firms by trading volume on NASDAQ. Yet, according to the SEC, it failed to maintain proper controls over the trading access that certain customers had to Wedbush’s trading platform. The SEC has alleged that Wedbush’s violations were caused by Jeffrey Bell, the former executive vice president in charge of Wedbush’s market access business, and Christina Fillhart, a senior vice president in the market access division. The Director of the SEC’s Enforcement Division noted that, “Wedbush provided market access to overseas traders without preapproval and without ensuring that they complied with U.S. law.” The SEC claims that Wedbush failed to protect U.S. markets from the risks posed by traders improperly had access to Wedbush’s trading platform.
The SEC claims that Wedbush was well aware of rules that obligated it to have in place risk management controls and supervision relating to its market access business, but that it failed to comply with those obligations. As we have seen time and time again, Wedbush appears to have little to no concern for its obligations to protect the integrity of the securities markets. In our FINRA arbitration practice, our securities lawyers have filed numerous claims against Wedbush on behalf of customers who lost money as a result of Wedbush’s repeated and gross violations of regulatory rules and the law.