Wedbush Securities has agreed to pay a $16,250 fine relating to alleged municipal securities rule violations as part of a settlement of a broader disciplinary action brought against it by the Financial Industry Regulatory Authority.
FINRA alleged that Wedbush violated Municipal Securities Rulemaking Board Rule G-15 by failing to disclose required mark-up and mark-down information on retail customer confirmations, a settlement document accepted by FINRA Nov. 7 shows. The firm also violated MSRB Rule G-27 by failing to set up and maintain a supervisory system reasonably designed to achieve compliance with Rule G-15, FINRA found.
The $16,250 was the MSRB rule-related portion of a $150,000 total fine Wedbush agreed to pay. It also consented to the imposition of a censure. In addition to the alleged MSRB rule violations, FINRA found that Wedbush violated Section 15(c)(3) of the Securities Exchange Act of 1934, Exchange Act Rule 15c3-3 and certain FINRA rules.
Wedbush consented to FINRA's findings, detailed in the settlement document, without admitting or denying them. Headquartered in Los Angeles, the firm employs about 500 registered representatives and has 70 branch offices, the document said.
According to the document, FINRA found that between August 2022 and August 2023, the firm issued about 300 confirmations for municipal securities transactions to retail customers that didn't include mark-ups and mark-downs expressed as a total dollar amount and as a percentage of the prevailing market price, or PMP for short.
The failures stemmed from "Wedbush personnel failing to timely enter PMP into the firm's order management system," the document said.
"Trade confirmations protect investors who buy or sell securities through broker-dealers by, among other things, alerting them to potential conflicts of interest with their broker-dealers and providing them the means to verify the terms of their transactions and evaluate transaction costs and the quality of their broker-dealers' executions," FINRA said in its findings.
FINRA also found that between August 2022 and August 2023, the firm failed to establish and maintain a supervisory system – including written supervisory procedures – reasonably designed to achieve compliance with MSRB Rule G-15.
"Wedbush's [written supervisory procedures] contained no procedures regarding when firm personnel were required to enter the PMP for applicable transactions into Wedbush's order management system, and the firm did not provide any training or guidance to supervisors regarding when the PMP should be entered into that system," FINRA said in its findings.
"Wedbush does not have a comment at this time," a spokesperson for the firm said on Monday.
