Securities Lawyers Blog
This post continues our examination of the numerous regulatory actions against Wedbush Securities, Inc. (Wedbush) for its failure to supervise the activities of its employees and the recent National Adjudicatory Council (NAC) decision affirming the FINRA hearing decision.
What were the failures to report that were claimed by FINRA? In one instance, a client faxed a letter to Wedbush alleging that his broker had committed unauthorized trades but Wedbush did not report the complaint until January 2010, 275 days later. At hearing Wedbush conceded that the complaint was not timely reported but disputed their responsibility for the late reporting because a firm office manager failed to forward the letter to the business conduct department after concluding that the letter wasn’t a customer complaint. FINRA found though that the office manager’s failure does not excuse the late filing or the firm’s responsibility for the late filing.
In addition, the firm had argued that Mr. Wedbush was not liable for failure to supervise because he was more of a manager than a supervisory. Again, FINRA disagreed stating that as president he was ultimately responsible for the misconduct.