NYSE Opens Investigation into Wedbush Securities Inc. CEO and President Edward W. Wedbush for Systemic Trading Failure
Posted on Wednesday, December 6th, 2017 at 11:00 am
Erez Law is currently investigating Wedbush Securities Inc. CEO and president Edward W. Wedbush (CRD# 461221) regarding an overall systemic failure to oversee and supervise trading activities. Wedbush has been registered with Lime Brokerage LLC in New York, New York since 2013 and with Wedbush Securities Inc. in Los Angeles, California since 1966.
In October 2017, the New York Stock Exchange (NYSE) opened up an investigation against Wedbush alleging, “Failing to record account designations until the end of the NYSE trading day, failing to identify each discretionary order as such and the entry of inaccurate capacity codes.” According to the NYSE complaint, Wedbush spent several hours each day managing in trading in more than 70 discretionary, personal and proprietary customer accounts. Wedbush Securities Inc. failed to implement any process to monitor or supervise Wedbush’s order entry, trade executions or trade allocations, including potential conflicts of interest and manipulative activity. The complaint alleges that Wedbush ignored the rules of trade order entry and “cherry picked” the best performing transactions for his own accounts. Wedbush and another employee under Wedbush’s supervision, would aggregate the shares bought or sold and conduct a volume-weighted average price calculation.
In March 2017, the U.S. Department of labor opened a complaint for Employee Retirement Income Security Act (ERISA) violations, a set of federal laws designed to protect employees of private employers who provide pension, retirement, or profit-sharing plans or health insurance coverage. Additional complaints included violating fiduciary duties and engaging in prohibited transactions.
In August 2012, FINRA fined Wedbush $25,000 and suspended him from association with any FINRA member for 31 days in any supervisory capacity, except that he is not suspended from any supervisory activities with respect to trading or order entry activities following a FINRA investigation alleging that Wedbush failed to establish and maintain a supervisory system, and establish, maintain and enforce written supervisory procedures reasonably designed to achieve the firm’s compliance with applicable laws, rules and regulations with respect to regulatory filings. According to the complaint, “Despite red flags, Wedbush failed to follow up on information he received regarding dilatory filings to ensure that the firm’s system in place to file registration disclosures was adequate.” Despite Wedbush personally taking over supervision of the business conduct department, the firm continued to be non-compliant under his direct supervision and Wedbush failed to sufficiently improve the reporting process. In December 2014, the NAC affirmed the findings, imposed a 31-day suspension in all principal capacities and a $50,000 fine and $14,930.95 in hearing costs. In October 2016, Wedbush appealed the decision to the United States Court of Appeals for the Ninth Circuit; the sanctions are not in effect pending the review.
Wedbush has been the subject of one customer complaint, according to his CRD report:
January 2011. “Mr. Wedbush as the president of the firm failed to supervise one of the firms brokers.” The customer sought $1 million in damages and the case was settled for $1,365,855.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Wedbush Securities Inc. may be liable for investment or other losses suffered by Wedbush’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.