The SEC has upheld a FINRA ruling to fine Wedbush founder Edward Wedbush $50,000 and suspend him for 31 days for allegedly failing to supervise mandated regulatory filings, according to a decision from the regulator made Aug. 12.
The SEC's decision also upheld a $300,000 fine against the firm.
Wedbush, who served as president, chief compliance officer and business conduct manager of the Los Angeles-based broker-dealer, had filed an appeal of the FINRA ruling in January.
FINRA's original complaint, filed in Oct. 2010, alleged that Wedbush’s eponymous brokerage had committed 158 violations of NASD and NYSE rules. The violations were broken down into three categories: failing to submit required forms and reports, filing them late and filing inaccurate versions, all from January 2005 to July 2010.
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The firm misreported over 1 million transactions, according to the regulator.
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The regulator also says that the firm suffered from supervisory failures during a four-year period.
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The adviser allegedly placed more than 700 trades over three years, giving the client "little to no possibility" for a profit, the regulator says.
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FINRA also charged Wedbush and the firm with failure to supervise the regulatory filings, in violation of NASD and FINRA rules.
A spokesman for Wedbush and the firm declined to comment.
According to the SEC, Wedbush failed to adequately implement the supervisory procedures of Wedbush. “He was unquestionably aware of the problems at the firm but chose to direct his attention to other areas, even when he became the (business conduct manager),” the SEC decision states.
FINRA had ruled that about one-fifth of the violations occurred when Wedbush was business conduct manager, and three-fifths while another business conduct manager reported directly to him. FINRA had also found that Wedbush was aware of the regulatory issues at the firm, yet failed to act “decisively and reasonably to address the issues.”
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After more than three-and-a-half years at the helm, Mary Jo White made incremental moves to expand advisor exams, but did not move on structural reform or implement a uniform fiduciary standard, as many advocates had hoped.
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While it’s early in the process, a number of names are being floated as possible contenders.
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In his appeal to the SEC, Wedbush didn’t challenge the violations, but his lawyers argued that he didn’t fail to reasonably supervise, and that FINRA didn’t provide adequate notice that it might impose a suspension.
Earlier this month, the firm dropped its appeal of a $1 million FINRA fine for 816 blue sheet responses from 2012 to 2013 that were not complete and accurate. The severity of the fine was based in part on the firm’s "extensive disciplinary history," according to FINRA.
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