Wedbush Securities and its cofounder Edward Wedbush have been ordered by the regulatory arm of the New York Stock Exchange to pay $1 million for unsupervised trades.
Wedbush Founder Engaged in Unsupervised Trades
Claims against Edward Wedbush alleged that the founder worked the trading desk without oversight, engaging in trading activities for his friends, family, and staff. Recently, the company’s leader of 64 years engaged in trading activities that resulted in a massive margin deficit. Records showed that several “personal” accounts managed by Wedbush fell below margin maintenance requirements resulting in a massive margin deficit.
Wedbush Fails to Correct Margin Call
Last year, Wedbush refused to satisfy a margin call, which led to the resignation of many senior managers and put the Los Angeles-based firm in trouble with regulators. According to the NYSE, when the margin debt grew from $4.5 million in November 2017 to $23 million in January 2018, the credit team provided the margin calculations to Wedbush, urging him to take action. Wedbush did indeed take action, but only to pay down a small portion of the margin debt. At the end of February 2018, the deficit was $18 million.
FINRA followed up with the firm on March 1, ordering Wedbush to correct the deficit by the close of business the next day and while staff at the firm were on board. But Wedbush objected to the liquidation of positions in his accounts to pay the margin debt.
Regulators said that the firm’s chief risk officer and chief administrative officer had to step in and force staff to make the necessary trades to bring the personal accounts into compliance. Though Wedbush sought to retaliate against staff who stepped in, no final disciplinary action was taken.
Wedbush Charges Reflect Firm Rife with Problems
The charges against Wedbush include violating exchange margin requirements, keeping insufficient records of trade history, and refusing to let anyone supervise his personal trades. NYSE Regulators also charged the firm for allowing its president to operate without adequate oversight, violating exchange margin requirements, and neglecting to maintain a system of risk management controls.
Wedbush Has History of Regulator Issues
As we have previously reported, Wedbush Securities and the firm’s founder have had multiple issues with regulators over the years. Previous disciplinary actions have included failing to turn in fillings on time and numerous supervisory failures.
Speak with an Investment Fraud Attorney
Dimond Kaplan & Rothstein, P.A. has experience in representing investors who have sustained losses due to the negligence or misconduct of their broker and/or brokerage firm, including cases involving stockbroker misconduct.
Our AV-rated* lawyers have extensive experience litigating a broad range of investment disputes, including those involving margin calls and general misconduct. Our lawyers have successfully recovered money from Wedbush after our clients lost money with Wedbush brokers. We will aggressively pursue claims against Wedbush Securities to recover your investment losses.
If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. represent individual and institutional investors who have lost money as a result of investment fraud or stockbroker misconduct. We’ve recovered more than $100 million in assets lost to investment fraud and stockbroker misconduct.
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