21 April 2015

Finra charges Wedbush Securities with market access violations

18 August 2014  |  3863 views  |  0 Wall street sign

Wall Street regulator Finra has charged brokerage Wedbush Securities with systemic market access violations and anti-money laundering and supervisory failures.

Between January 2008 and August 2013, Wedbush failed to put in enough resources to risk management, and supervisory systems and procedures, says Finra (the Financial Industry Regulatory Authority).

This enabled its market access customers - including high-frequency traders - to "flood" US exchanges with thousands of potentially manipulative trades. The firm was obligated to monitor and detect these suspicious trades, yet it largely relied on customers to self-report, alleges Finra.

Not only where controls not up to scratch, Wedbush policies created incentives that rewarded compliance personnel with compensation based on market access customer trading volume.

The Finra complaint comes after the Securities and Exchange Commission made similar charges against Wedbush and two executives in June. These are being disputed.

The brokerage now has the chance to file a response to Finra and request a hearing before a disciplinary panel. It could ultimately face a fine, censure, suspension or bar from the securities industry.

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