SEC Claims Wedbush Violated Risk Controls

WASHINGTON (CN) – The SEC on Friday accused Wedbush Securities, “one of the largest volume market access providers in the United States,” of violating SEC rules on risk controls.
     “From July 2011 until at least January 2013 (the ‘relevant period’), Wedbush served as the gateway to U.S. markets for dozens of trading firms, including foreign, domestic, registered, and unregistered firms, as well as thousands of their traders. Most of these firms and their traders engaged in trading activity that did not flow through any Wedbush systems before reaching exchanges and other trading venues in the U.S.,” the SEC said in its administrative cease-and-desist order.
     Wedbush has “consistently ranked as one of the five largest firms by trading volume on NASDAQ,” the SEC said in a statement.
     “Wedbush did not have the required pre-trade controls, failed to restrict trading access to people whom the firm preapproved and authorized, and did not conduct an adequate annual review of its market access risk management controls,” the statement said. “The Enforcement Division alleges that the firm’s violations of the market access rule were caused by Jeffrey Bell, the former executive vice president in charge of Wedbush’s market access business, and Christina Fillhart, a senior vice president in the market access division.”
     Bell and Filhart, along with Wedbush, are respondents in the SEC’s cease and desist order.
     “Wedbush provided market access to overseas traders without preapproval and without ensuring that they complied with U.S. law,” the director of the SEC Enforcement Division said in the statement.
     Wedbush et al. were given 60 days to respond to the SEC order.

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