Wedbush Morgan Background Information
Its website states: “Wedbush Morgan focuses on middle-market companies and their entrepreneurial leaders, and has met the financing needs of numerous successful growth companies across a variety of industries through public offerings, private placements and financial advisory services. Wedbush Morgan's research and investment banking groups focus on sectors within technology, consumer goods and services, life sciences, industrial and business service.”
The firm has four main divisions and is apparently adding a fifth. Wedbush Morgan Securities provides traditional brokerage, research and advisory services through over 150 registered representatives. The investment banking division advises companies on capital formation, including debt financing and public offerings .
Wedbush Capital is a private equity subsidiary which focuses on large positions, recapitalizations and management buyouts. Wedbush’s clearing unit provides custody, trading and back office operations for over 100 “introducing” brokerage firms and others, including hedge funds.
On Shepherd Smith Edwards & Kantas LTD LLP Law Firm
Shepherd Smith Edwards & Kantas LTD LLP Law Firm
Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.
Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled over a thousand cases against hundreds of large and small investment firms, including against Wedbush Morgan Securities.
Call us at (800)259-9010 or contact us through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.
Wedbush Morgan Fined in Late Trading Scandal
The National Association of Securities Dealers censured and levied a $150,000 fine on Wedbush Morgan Securities for inadequate systems and procedures to detect and prevent late trading in mutual funds and for inaccurately recording entry times for customer orders.
Late trading refers to the practice of placing orders to buy or sell mutual fund shares after the 4 p.m. ET market close, at the net asset value established when the market closes. Late trading allows traders to profit from market-moving events which occur after the close of the market which are not reflected in that day's closing share price.
"Late trading is illegal and to prevent it, firms must implement systems to guarantee that all mutual fund orders processed after the close of the market were received during normal trading hours," said an NASD Vice Chairman.
The NASD found that Wedbush Morgan “facilitated and permitted late trading and failed to comply with the SEC ‘forward pricing rule’ ”, and that it failed to establish, maintain and enforce supervisory systems” to prevent and detect late trading. The firm consented to the order without either admitting or denying the allegations.
Wedbush Morgan Violated Disclosure Rules
The NASD censured and fined Wedbush Morgan Securities $18,000 for failing to make required disclosures about its registered representatives in a timely manner. The firm consented to the sanction without admitting or denying the allegations.
The investigation was commenced as a result of complaints by securities attorneys, including the law firm of Shepherd Smith Edwards & Kantas LTD LLP, and others, that securities firms were ignoring requirements to notify regulators of customer complaints, regulatory actions and even criminal charges and conviction in a timely fashion. The investigation revealed that some disclosures, due in 30 days, were made years after the events - often after broker left the firm - and some were never filed at all.
Regulators must rely upon firms to make timely disclosure because oversight of more than 665,000 registered brokers at over 5,000 registered firms is otherwise extremely difficult. Securities firms chose decades ago to be “self-regulated”. “Investors, regulators and others rely heavily on the integrity of the information in the CRD public reporting system … and the integrity of that system depends on accurate and prompt reporting by firms,” said an NASD official.
Wedbush Morgan Fined for Trade Report Lapses:
The NASD fined Wedbush Morgan Securities $32,000 for failing to report transactions in a timely manner. The firm consented to the sanctions without admitting or denying the allegations.
The NASD found that the firm failed to accept or decline transactions within 20 minutes, as required, failed to report trades within 90 seconds after the transaction, also as required and failed to properly designate reports as late. It also found that the firm failed to properly submit short-sale information to the NASD and did not properly supervise its agents.
Wedbush Morgan Failed to Supervise Its Broker
Wedbush Morgan Securities, Inc. was sanction for failing to supervise a registered representative as that broker was committing sales violations against clients in violation of the NASD’s Rules of Fair Dealing.
A registered representative in a Meadow Valley, California branch office of Wedbush Morgan Securities was investigated, sanctioned, fined and suspended in a decision made after hearings were held before the NASD’s District Business Conduct Committee. That decision was later confirmed by the NASD’s National Business Conduct Committee.
The NASD sanctioning order stated that “[t]he sanctions were based on findings that [the broker] exercised effective control over the account of public customers and engaged in excessive transactions, commonly referred to as ‘churning,’ in the account. These transactions were unsuitable for the customers in view of the size and frequency of the recommended transactions, and the customers' financial situation and needs.”
Regarding Wedbush Morgan, the NASD stated that “[i]n connection with such activities, the firm, acting through [his supervisor], failed to take the appropriate steps to enforce the firm's written supervisory procedures” which are designed to prevent such violations. In addition to a fine the firm was required to “submit a letter to the NASD describing steps it has taken to detect and prevent” such actions by its representatives and supervisors.