FINRA Fines Wedbush Securities $1.5M for Consumer Protection
Wedbush Securities has been fined $1.5 million by the Financial Industry Regulatory Authority (FINRA) for violating the consumer protection and net capital rules of the U.S. Securities and Exchange Commission (SEC). The regulator found that Wedbush Securities exposed customers to unnecessary risk and failed to fix the issue for a number of years. This is merely the latest in a very long list of regulatory fines against Wedbush.
FINRA Finds Several SEC Violations During Investigation
During its investigation, FINRA found that between 2015 and 2016 Wedbush failed to take required deductions when the Los Angeles-based firm valued certain deposits. The failure resulted in a net capital deficiency that ranged widely between $10.5 million and $59.4 million. A net capital deficiency violates SEC rules requiring broker-dealers to maintain a minimum amount of net capital to protect their customers from risk.
FINRA also found that Wedbush repeatedly failed to accurately calculate its customer reserve requirement between 2011 and 2016. According to FINRA, Wedbush underfunded its customer reserve account by up to $77 million on 73 occasions. Wedbush also included ineligible assets in its customer reserve account, the Los Angeles brokerage firm to underfund its reserve an additional 110 times by up to $375 million.
The regulator also found that Wedbush Securities repeatedly put the firm’s customers at risk by increasing deficits in securities that it was required to keep in its possession. It also repeatedly held customer assets in locations that were not protected from claims by third parties.
Wedbush Consents to Consumer Protection Findings
According to the order, Wedbush Securities has consented to FINRA’s findings without admitting or denying the allegations. FINRA has commented that firms like Wedbush have a responsibility to protect the securities of customers and must have and maintain adequate supervisory systems to do so.
Wedbush Is No Stranger to Regulatory Violations
The Los Angeles, California-based brokerage firm Wedbush Securities Inc. is a full-service brokerage firm that conducts general securities business through approximately 100 branch offices. The firm has been the subject of many customer complaints that have accused Wedbush of substandard practices abusing customers’ trust and violating consumer protection laws.
Wedbush Securities also has been the subject of close to 100 regulatory investigations, fines, and settlements involving, among other things, inadequate supervisory procedures and failure to supervise. Recently, the firm was fined in 2016 for filing late or failing to file forms that documented judgments and customer complaints against the firm and its representatives. In the fall of 2017, the firm faced an NYSE complaint for failure to supervise trading activities of the firm’s founder, Edward William Wedbush.
DKR Files FINRA Arbitration Claim Against Wedbush Securities
The securities fraud attorneys at Dimond Kaplan Rothstein have represented a number of customers who have lost money as a result of various types of wrongdoing by Wedbush. Recently, Dimond Kaplan Rothstein, P.A. filed a FINRA arbitration claim against Wedbush Securities to recover energy-sector investment losses for an elderly investor.
Are You a Victim of Securities Fraud?
If you lost money with Wedbush Securities or believe you are a victim of securities fraud, contact a qualified securities fraud attorney today.
Call a Securities Fraud Attorney Today
If you are looking for a securities fraud attorney to review your rights and options, the securities fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.