FINRA fines Wedbush Securities for misrepresentations regarding payments on certain bonds and for failing to deliver required disclosures to thousands of the firm’s customers.
The Los Angeles-based wealth management, brokerage and clearing firm, which has 540 registered individuals in 40 branches nationwide, agreed to pay the fines and be subject to censure without admitting or denying the findings, according to a Nov. 3 settlement with FINRA.
From January 2013 through December 2018, Los Angeles–based Wedbush “negligently misrepresented,” in thousands of monthly account statements sent to a total of some 610 customers, that 38 municipal or corporate bonds held by the customers had continued making interest or principal payments when they were actually in default, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.
FINRA alleged that Wedbush had received notice that the bonds were in default but failed to notify the vendor that maintained data on customer-held securities. In all, Wedbush sent more than 19,600 such statements, according to FINRA.
FINRA further alleges that, from January 2010 through August 2020, Wedbush didn’t deliver required privacy notices, order-execution disclosures and margin disclosures to about 14,900 customers.
Wedbush also failed to maintain an adequate supervisory system, including written supervisory procedures, to achieve compliance with the delivery of the statements and disclosures, according to FINRA.
Last week, Wedbush agreed to a censure and to a fine of $850,000 without admitting or denying the findings, FINRA says. The firm did not respond to a request for comment.