BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- Wall Street News
- General News
- Donald Trump & Co.
- Regulatory Sanctions
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Trading Desk Assignments at Wedbush Violated Regulation SHO
[Photo: glass com]
by Howard Haykin
Wedbush Securities agreed to pay a $110K fine to settle FINRA charges that it violated Regulation SHO when it: (i) mismarked short sale orders; (ii) engaged in short sales without fulfilling its borrowing obligations; and, (iii) failed to comply with trading unit aggregation requirements. It is the 3rd aspect of this case that Financialish covers in this post.
BACKGROUND. Wedbush, a Los Angeles, CA-based broker-dealer, has been a FINRA member since 1955. The firm has several relevant prior regulatory disclosures – though relating in large part to mismarked orders and incorrect OATS submissions.
FINRA FINDINGS. Rule 200(f) of Regulation SHO … requires a broker or dealer to aggregate all of its positions in a security unless it qualifies for independent trading unit aggregation – which is available only if:
- the broker-dealer has a written plan of organization that identifies each aggregation unit ("AGU"), specifies its trading objectives, and supports its independent identity;
- each AGU within the firm determines, at the time of each sale, its net position for every security that it trades;
- all traders in an AGU pursue only the particular trading objectives or strategies of that AGU and do not coordinate that strategy with any other aggregation unit; and,
- individual traders are assigned to only one AGU at any time.
During a 2014 Trading and Financial Compliance Exam (“TFCE Exam"), staff of FINRA Market Regulation observed that Wedbush Securities employed 4 individuals who acted as both a trader in one AGU and as a trader or supervisor in another AGU. Two individuals served in such dual capacities dating as far back as February 2008. In addition, the firm's written plan of organization reflected unclear strategies, strategies that overlapped for multiple AGUs, and traders that also acted as traders or supervisors in other AGUs.
FINRA Market Regulation concluded that ... Wedbush engaged in trading unit aggregation but failed to ensure that: (i) individual traders were assigned to only one AGU at any time; (ii) AGUs had operated autonomously and engaged in separate trading strategies without regard to other trading units; and, (iii) AGUs had not coordinated trading activities or interacted or shared order or position information.
Such arrangement is improper because it could result in the coordination of trading strategies or trading based upon position or trading information of the other AGU.
This case was reported in FINRA Disciplinary Actions for October 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2014039939801.