The Financial Industry Regulatory Authority has charged Los Angeles-based Wedbush Securities Inc. with $1.5 million for violating SEC rules and a few other infractions, Finra announced Monday.
Wedbush agreed to Finra’s entry of the charges, but did not admit to or deny them.
Finra’s charges go back some years. Between 2009 and 2016, Wedbush increased and possibly created deficits in the amount of securities it was responsible for and held client assets in locations, Finra said, that were not protected from claims by third parties.
Wedbush Securities also failed to make certain deductions affecting its net capital, which resulted in the firm’s failure to maintain an appropriate net capital stance for five months between 2015 and 2016, according to Finra’s release.
The securities firm was also charged with neglecting to set up and support systems and procedures that would help it comply with SEC rules. Finra said Wedbush’s neglect prevented it from detecting deficiencies and keeping accurate records and exposed client assets and securities to risk.
Finra added that Wedbush Securities underfunded its customer reserve 73 times because it neglected to accurately calculate its customer reserve 84 times. On top of that, Wedbush did not deduct ineligible assets from its customer reserve, which caused it to underfund the reserve 110 more times.