Wedbush Fined $350k for Approving Fraudulent Wire Transfers Totaling $6.6 Million

Attorney Advising Disclaimer

FINRA censured Wedbush Securities and fined the Los Angeles-based firm $350,000 for approving multiple fraudulent wire transfer requests without taking reasonable steps to confirm the requests' authenticity. This isn't Wedbush Securities' first brush with disciplinary action. For instance, Wedbush in 2001 agreed to pay $1.2 million to settle SEC charges that it unlawfully sold 100 million unregistered microcap or penny stock shares.

In its present investigation, FINRA found that Wedbush failed to establish and maintain an adequate supervisory system to monitor transmittals of customer funds to third parties.

Wedbush's apparent supervision failures proved costly when, according to FINRA, Wedbush received and approved fraudulent wire transfer requests that actually originated from a hacker who gained access to an e-mail address belonging to a registered representative at a Wedbush correspondent firm.

The four fraudulent wires totaled more than $6.6 million—and, according to FINRA, despite the significant amount of money at stake, Wedbush approved the transfers without reasonably investigating red flags that the wire requests were fraudulent, such as their large size and that they requested to wire money to third-party recipients who had no relationship or connection to the customers whose accounts had been targeted.

If you invested with Wedbush Securities or another FINRA-member brokerage firm whose deficient supervisory procedures or failure to investigate is suspicious activity, such a fraudulent wire transfer request, and the firm's inappropriate approval of the requested resulted in losses due to fraud, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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