Wedbush Securities Settles SEC Failure-To-Supervise Charges Related to Pump and Dump Scheme
From the Desk of Jim Eccleston at Eccleston Law LLC:
Wedbush Securities, Inc. has agreed to settle an SEC administrative proceeding related to the firm’s failure to take action despite being aware that an employee was involved in a long-running pump-and-dump scheme.
According to the SEC, Wedbush Securities ignored numerous red flags and conducted two “flawed and insufficient” investigations involving its investment adviser Timary Delorm, who was involved with manipulative penny stock trading scheme that targeted retail investors.
In its consent order, the SEC stated that starting as far back as 2012, Wedbush Securities knew of Delmore’s illicit activity after receiving an email outlining her role in the fraud scheme and later, after receiving a FINRA inquiry into her personal trading habits.
In addition to the $250,000 in civil monetary penalties, Wedbush Securities agreed to make firmwide remedial changes. For instance, Wedbush Securities agreed to reshuffle senior leadership, make policy and procedure revisions, and adopt more effective electronic surveillance.
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