WASHINGTON — In a ruling that could spell trouble for Wedbush Securities Inc., a municipal securities trader snagged a $3.5 million arbitration award from the firm, based on its failure to pay him incentive-based compensation.

Stephen Kelleher, who left Wedbush after the arbitration hearing and has not registered with another firm, won the award late last month from a three-member panel of the Financial Industry Regulatory Authority in San Francisco. The panel cited Wedbush’s “morally reprehensible failure and refusal” to compensate Kelleher, who originally sought more than $7 million in damages from the firm.

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