Los Angeles-based Wedbush Securities Inc. has been slapped with a $6 million penalty by the Commodity Futures Trading Commission (CFTC) for failing to properly maintain and preserve records, as well as for inadequate supervision of its communications practices. The CFTC issued an order simultaneously filing and settling charges against the firm on Tuesday.
According to the order, Wedbush employees – including those in senior positions – routinely used unapproved communication channels, such as personal text messages, to discuss company business between approximately 2018 and the present. These communications, which included discussions related to Wedbush’s commodities business, were subject to CFTC recordkeeping requirements but were not preserved by the firm.
The CFTC found that Wedbush failed to maintain or preserve thousands of these crucial communications and would have been unable to promptly provide them to the agency if requested. This failure constitutes a violation of CFTC recordkeeping and supervision provisions, the agency stated.
“As this action demonstrates, all CFTC registrants must comply with their fundamental recordkeeping obligations,” said Ian McGinley, Director of Enforcement at the CFTC. “The CFTC’s recordkeeping and supervision requirements are central to its oversight of the U.S. derivatives markets and registrants. The CFTC will continue to pursue all registrants who fail to comply with these core obligations.”
The order requires Wedbush to pay the $6 million civil monetary penalty, cease and desist from further violations of recordkeeping and supervision requirements, and implement specific remedial actions detailed within the order. The Securities and Exchange Commission (SEC) also announced a parallel action against Wedbush on Tuesday, imposing a separate penalty for similar recordkeeping and supervision violations.
The case was led by CFTC Division of Enforcement staff members Jonah E. McCarthy, A. Daniel Ullman II, and Paul G. Hayeck.
Source: CFTC.gov
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