Wedbush to Pay SEC $250,000 for Failure to Supervise
The U.S. Securities and Exchange Commission (SEC) has announced that Wedbush Securities Inc. will pay $250,000 and be censured by the agency to resolve a failure-to-supervise charge.
The SEC had accused Wedbush of failing to take action despite being aware that an employee was involved in a pump-and-dump scheme. The settlement terms also infer self-imposed adjustments, which include a senior leadership reshuffle, policy and procedure revisions, better electronic surveillance, and the allocation of additional resources to internal and audit controls groups.
Wedbush Ignored Warnings of Broker Misconduct
According to the SEC, Wedbush Securities ignored warnings that one of its brokers, Timary Delorme, was involved with a manipulative penny-stock trading scheme. Although brokerage firms are required to supervise their brokers, the SEC claims that Wedbush turned a blind eye to the broker’s misconduct. Wedbush allegedly conducted two investigations into Delorme’s alleged activities but did not take steps to stop the scheme.
An SEC statement said, “Wedbush’s policies and supervisory systems lacked any reasonable coherent structure to provide guidance to supervisors and other staff for investigating possible facilitation of market manipulation by registered representatives, including Delorme.” It added that it found there was confusion as to who was responsible for investigating Delorme’s conduct.
Broker Manipulation Markets in Penny Stock Scheme
The SEC has stated that Wedbush was aware of Delorme’s market manipulation. It went on to state that Wedbush also was aware of Delorme’s prior questionable activity dating back to 2012 and 2013. An email outlined her role in a securities fraud scheme with Izak Zirk Engelbrecht, aka Zirk De Maison, and a FINRA inquiry into her personal trading.
In addition to the fine against Wedbush, the SEC filed a separate proceeding against Delorme, barred her from working at other brokerage firms and levied $50,000 in civil penalties.
Wedbush Consistently Under Regulatory Scrutiny
Wedbush Securities is almost always under SEC scrutiny for its regulatory violations as we have reported on the blog.
The founder of Wedbush Securities was recently scrutinized for his trading activities, calling into question the company’s failure to supervise its own founder. In February 2018, the Financial Industry Regulatory Authority fined Wedbush $1.5 million for violating consumer protection and net capital rules.
Prior to that, the firm paid a $2.44 million settlement to resolve charges for violating market access. In that case, the SEC alleged that Wedbush failed to have adequate risk controls in place before letting customers directly access the markets through its systems. The settlement also required the company to retain a consultant to review its compliance with regulatory requirements.
Notwithstanding repeated run-ins with securities regulators, millions of dollars in regulatory fines, and numerous FINRA arbitration losses, Wedbush Securities appears to be unwilling and uninterested in changing its ways.
Have You or Someone You know Lost Money as a Result of Stockbroker Misconduct?
Brokerage firms are obligated to supervise their brokers. If they fail to do so and a broker’s misconduct causes you financial harm, you may have a claim against the brokerage firm to recover your investment losses. If you or someone you know lost money as a result of stockbroker misconduct, contact an experienced investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today.
DKR’s lawyers have successfully represented Wedbush Securities customers who have lost money as a result of Wedbush’s or Wedbush Securities’s brokers’ alleged negligence or other misconduct.
Speak with an Investment Fraud Attorney
Our AV-rated* lawyers have extensive experience litigating a broad range of investment disputes, including those involving elder fraud. We will aggressively pursue claims against culpable brokerage firms 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.
Contact Dimond Kaplan & Rothstein Today
Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. to schedule an appointment for a FREE case evaluation to review your rights and options.
Our offices are located in Los Angeles, New York, Detroit, West Palm Beach, and Miami, and we represent clients nationwide. Translations services are available.