The financial-services firm Wedbush Securities settled a charge with the Securities and Exchange Commission on Wednesday related to what the SEC described as an employee’s “long-running pump-and-dump scheme targeting retail investors.” The agency said Wedbush ignored the scheme and failed to properly investigate.
“Wedbush abandoned important responsibilities to its customers by looking the other way in the face of mounting evidence of manipulative conduct,” Marc Berger, director of the SEC’s New York office, said in a statement. “After we filed our claim, Wedbush made significant changes aimed at reforming its practices to detect and report misconduct within its ranks.”
Wedbush will pay a $250,000 penalty, the SEC said, and has “agreed to be censured” to settle its charge of failing to supervise.
The SEC charged Wedbush in March 2018, saying the broker-dealer “ignored numerous red flags” that indicated the employee was involved in the long-running scheme.
The employee, Timary Delorme, who according to the SEC was an employee of Wedbush from 1981 to 2018, agreed last March to settle fraud charges stemming from the same scheme.
At that time, the SEC called Wedbush a “recidivist broker-dealer,” as the charge was the second SEC action against Wedbush in 2018 and the third since 2014.
“A considerable investment has been made by the Firm in supervisory systems and professionals, as well as in overall improvements to our compliance infrastructure. The result of this investment is one of many upgrades to our Private Wealth Management platform enabling Wedbush Financial Advisors to deliver continued improvements in client service,” the company said in a statement.
Rich Jablonski and Gary Wedbush, co-presidents of the firm, said in a statement: “The Firm takes very seriously its responsibility to supervise our Financial Advisors and we are appreciative of the SEC in helping us identify insufficiencies in our detection and reporting procedures and systems. We are confident these issues are fully rectified.”
Source: Markets Insider