The Financial Industry Regulatory Authority Inc. has fined Wedbush Securities Inc. $1.5 million for violating the Securities and Exchange Commission's net capital and customer protection rules, and for related supervisory and books-and-records failures.
Finra found that during a five-month period in 2015 and 2016, Wedbush was net-capital deficient, ranging between $10.5 million and $59.4 million. The deficiencies resulted from the Los Angeles-based firm's failure to take required deductions when valuing certain certificates of deposit for purposes of computing its net capital, Finra said in a release.
In addition, from 2011 to 2016, Wedbush failed to accurately calculate its customer reserve requirement on 84 occasions, causing the firm to underfund its customer reserve account 73 times, in amounts ranging from approximately $2 million to $77 million. Wedbush also included ineligible assets in its customer reserve account, causing it to underfund its reserve an additional 110 times, in amounts ranging from approximately $9 million to $375 million.
Finra also said that from 2009 to 2016, Wedbush repeatedly violated the possession or control requirements of the customer protection rule by creating and/or increasing deficits in the quantity of securities it was required to keep in its possession or control, and holding customer assets in locations that were not protected from claims by third parties.