FINRA fined Wedbush Securities $150,000 for violating the Exchange Act's Customer Protection Rule and Municipal Securities Rulemaking Board (MSRB) provisions pertaining to margin securities and mark-up/mark-down disclosures, respectively.
Wedbush purportedly failed to maintain control of customers' fully paid and excess margin securities as required by rule, which resulted in deficits in customers' calculated securities. In finding that Wedbush's possession and control issues were themselves caused by supervisory failures, FINRA wrote that Wedbush's deficit at some points exceeded 100,000 shares or $2 million in value.
Additionally, Wedbush violated MSRB rules regarding mark-ups/downs by failing to disclose this information on retail customer confirmations for certain municipal securities transactions. The report states that by failing to disclose mark-ups and downs as a percentage and total dollar amount, Wedbush violated rules that were put into place to protect investors by alerting them to potential conflicts of interest, as well as providing financial information that the customers can use to verify the terms of their transactions and related fees/sales charges.
Ultimately both of these failures placed Wedbush customers in jeopardy of financial loss or, in the case of the MSRB rules violation, damages as a result of not having the information required to make sound decisions regarding their investments.
If you invested with Wedbush Securities or with any broker-dealer whose disclosure or supervisory failures have left you in the dark about key financial data, resulting in losses or other damages due to a lack of information, 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.