The 82-year-old founder and president of Wedbush Securities Inc., Edward William Wedbush, got more than he bargained for after appealing a 2012 decision by a hearing panel of the
Financial Industry Regulatory Authority Inc.
Rather than overturning or simply upholding the original decision, the National Adjudicatory Council, a Finra appellate body, issued harsher sanctions, increasing the scope of Mr. Wedbush's original suspension and doubling the fine for reporting violations, according to a
decision dated last Thursday.
The council suspended
Mr. Wedbush in all principal capacities for 31 days and doubled the fine to $50,000, according to the decision.
The original terms would have still allowed Mr. Wedbush to supervise trading and entry of customer orders during his suspension.
“We believe Mr. Wedbush should be suspended in all principal capacities because his misconduct demonstrates a troubling disregard for supervision in general,” the decision states. “A suspension in all supervisory capacities is appropriately tailored to fit Mr. Wedbush's misconduct and his refusal to acknowledge his supervisory responsibility as president of the firm.”
Finra also upheld the
original decision ordering the firm to pay $300,000 over allegations that it failed to properly implement supervisory procedures.
Mr. Wedbush founded the firm, which has around 100 offices around the country, in 1955. A Wedbush Securities media representative, Brittany Price, said the firm declined to comment.
The council said that while “reckless,” the infractions “were not motivated by fraud or intentional malfeasance,” according to the decision.
Finra's Division of Enforcement initially filed a complaint against Wedbush Securities and its founder in October of 2010. In 2012, a hearing panel found Wedbush Securities liable for over 100 reporting violations with alleged issues dating back to 2002. The hearing panel said that the firm had filed late and inaccurate employment and registration forms for employees and reports concerning customer complaints.
In one case, according to Finra, a Form U5 notice advising that the firm had terminated a broker's registration, was 457 days late. In another case, a report of an arbitration claim misstated the amount of the claim by more than $500,000 and named respondents incorrectly.
“This information would not only be important to regulators, which may want to inquire into the details of each matter to determine whether disciplinary actions against the brokers or the firm would be appropriate, but also to customers seeking information about the firm and its brokers,” according to the decision.
Wedbush Securities appealed the decision, arguing that the firm had taken corrective actions, the hearing was unfair and that Mr. Wedbush was not individually responsible for the violations.
The council disagreed, however, and found Mr. Wedbush responsible for implementing the firm's supervisory procedures. He had also served brief stints as chief compliance officer and also as a business conduct manager when the alleged violations occurred, Finra said.
In addition, Mr. Wedbush was late in submitting an amendment to his own record to disclose a Wells Notice that Finra intended to seek disciplinary action over his alleged failure to supervise the firm's filing procedures.
The decision did not specify when the suspension would begin.
