Wedbush settles Finra charges for misleading account statements
Wedbush Securities allegedly sent clients monthly account statements showing that their bonds were paying interest when in fact the bonds were in default, according to Finra, the brokerage industry’s self-regulatory body.
Finra fined Wedbush $850,000 for the alleged misrepresentations and ordered the company to update its procedures and monitoring system, in accordance with a November 4 regulatory order.
Finra said Wedbush’s allegedly negligent misrepresentations occurred from 2013 to 2018. The self-regulator said Wedbush failed to establish and maintain a reasonably designed monitoring system to verify the accuracy of statement information. of customer account.
The brokerage company sent the allegedly misleading account statements to around 610 customers, according to Finra. Although Wedbush allegedly received notifications that the bonds were in default, it ultimately did not pass that information on to customers, Finra said. Wedbush was reportedly notified in September 2016 that some customers were receiving erroneous statements, but the company did not take steps to verify account information, according to the regulator.
In addition, Finra said that over a decade, Wedbush failed to provide approximately 14,900 clients with three types of annual notices and disclosures required by Finra and SEC rules.
A Wedbush representative was unavailable for immediate comment.
The company consented to the fine and Finra’s findings without admitting or denying the allegations, in accordance with the regulatory order.
Wedbush was founded by Edward Wedbush in 1955. The company is based in Los Angeles and has approximately 540 registered representatives. Last year, the brokerage firm paid more than $1.2 million to settle SEC allegations that it failed to file suspicious activity reports regarding the unregistered distribution of nearly $100 million. of low-cost microcap stocks.
Write to Andrew Welsch at [email protected]