FINRA accused Los Angeles-based Wedbush Securities of systematic market access violations and anti-money laundering ("AML") deficiencies, filing a complaint that charged Wedbush with failing to maintain proper controls over a six-year period during which the firm's supervisory program was deficient.
FINRA's four officially filed causes of action against Wedbush Securities Inc. include (1) supervisory deficiencies, (2) anti-money laundering (AML) deficiencies, (3) market access violations and (4) violation of just and equitable principles of trade.
According to the complaint, Wedbush's flawed control system took hold in January 2008 and persisted through August 2013, during which market access customers could flood U.S. exchanges with thousands of potentially manipulative trades, such as wash trades, layering (executing an order on the opposite side of the market than where limit orders are entered, thus artificially creating a price, and then immediately canceling the non-bona fide orders) and spoofing (another method through which orders are entered, followed by cancellation and entry of an order on the opposite side of the market).
FINRA concluded that because Wedbush then relied on market access customers to self-monitor and report such "red flag" trading, the firm failed to supervise and dedicate sufficient resources to ensure appropriate risk management controls and procedures.
Throughout the relevant period, regulators issued multiple industry-wide notices and disciplinary decisions to put Wedbush on notice regarding misconduct that increased its regulatory and compliance risk.
Nonetheless, Wedbush allegedly failed to revise its inadequate internal review system and its written policies and procedures concerning risk management controls.
FINRA furthermore alleged that Wedbush's supervisory systems and procedures were not designed to achieve compliance with federal securities laws and regulations, much less FINRA and SEC AML rules regarding manipulative and suspicious trading by market access customers.
Investigators also charged Wedbush with failing to develop and implement a written AML program designed to comply with the Bank Secrecy Act, thus willfully violating provisions of both the Securities Exchange Act of 1934 and FINRA rules.
If you have invested with Wedbush Securities Inc. or with any other firm whose supervisory, AML or other structural deficiencies, market access violations or similar illicit and willful misconduct has proven harmful to your investments or financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.