Wedbush Securities Inc. To Pay Over $1.2 Million In Charges For Unregistered Equities Sales
The SEC has announced that Wedbush Securities Inc. will pay over $1.2 million to settle charges relating to the unregistered sales of over 100 million shares of 50 low-priced microcap companies.
The SEC Order finds that Wedbush made unregistered sales of large blocks of low-priced equities in 2017 and 2018 that were part of the illegal, unregistered distribution of securities by Silverton SA (a/k/a Wintercap SA), an ex-customer located offshore. As stated in the Order, Wedbush failed to engage in proper diligence before making the sales. Wedbush’s sales thus did not qualify for the registration exemptions that often apply to brokers’ transactions. According to the SEC Order, despite multiple red flags, Wedbush also failed to file suspicious activity reports for certain transactions it executed for Silverton.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated: “Broker-dealers have a critical obligation to inquire into the origin of any microcap security they sell, as well as an obligation to report suspicious activity relating to transactions in the markets. It is our expectation that they will fully perform these important gatekeeping obligations, and when they fail to do so we will hold them accountable.”
According to the SEC Order, Wedbush violated the registration provisions and recordkeeping requirements of federal securities laws. Without admitting or denying the SEC’s findings, Wedbush agreed to pay a $1 million civil payment, plus disgorgement and pre-judgment interest of over $207,000.
In 2018, the SEC charged several related parties, including Silverton’s principal, Roger Knox, with engaging in a fraudulent scheme to offer and sell large blocks of unregistered microcap shares.
If you purchased microcap securities from Wedbush, you may wish to consult with an attorney. The securities attorneys at Morgan & Morgan’s Business Trial Group are here to help. Please contact us a 888.744.0142 or visit us online for a free consultation.
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