A broker-dealer agreed to settle SEC charges, originally filed in March 2018, for failing to supervise one of its registered representatives and for ignoring various red flags indicating that the representative could be involved in market manipulation.
According to the SEC Order, Wedbush Securities, Inc. ("Wedbush") was aware of aspects of a registered representative's manipulative trading of penny stocks, but Wedbush's supervisory policies and implementation systems failed to guide staff on how to properly investigate the activity and had no clear process for how to handle red flags of potential market manipulation. The Commission further found that Wedbush conducted two inadequate investigations into the registered representative's misconduct and failed to take action.
Wedbush agreed to be censured and to pay $250,000 to settle the charges. The settlement was entered on a neither-admit-nor-deny basis and the SEC acknowledged various remedial measures taken by Wedbush, including changes made to senior leadership, updated policies and procedures, and improved electronic surveillance.