In re Wedbush Securities Inc.

 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 98074 / August 8, 2023 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6369 / August 8, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21550 
 
 
In the Matter of 
 
Wedbush Securities Inc.,  
 
Respondent. 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTIONS 15(b) AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934 
AND SECTIONS 203(e) AND 203(k) OF 
THE INVESTMENT ADVISERS ACT OF 
1940, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS 
AND A CEASE-AND-DESIST ORDER 
 
 
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 
(“Exchange Act”) and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Wedbush Securities Inc. (“Respondent” or “Wedbush”). 
 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, and Sections 203(e) 
and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial 
Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 

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III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that 
 
Summary 
1. The federal securities laws impose recordkeeping requirements on broker-dealers 
and registered investment advisers to ensure that they responsibly discharge their crucial role in 
our markets.  The Commission has long said that compliance with these requirements is essential 
to investor protection and the Commission’s efforts to further its mandate of protecting investors, 
maintaining fair, orderly, and efficient markets, and facilitating capital formation. 
2. These proceedings arise out of the widespread and longstanding failure of 
Wedbush employees throughout Wedbush, including at senior levels, to adhere to certain of 
these essential requirements and Wedbush’s own policies.  Using their personal devices, these 
employees communicated both internally and externally by personal text messages, or other text 
messaging platforms such as WhatsApp (“off-channel communications”). 
3. From at least January 2019, Wedbush employees sent and received off-channel 
communications that related to the business of the broker-dealer and registered investment 
adviser operated by Wedbush.  Respondent did not maintain or preserve the substantial majority 
of these written communications.  Respondent’s failure was firm-wide, and involved employees 
at all levels of authority.  As a result, Wedbush violated Section 17(a) of the Exchange Act and 
Rule 17a-4(b)(4) thereunder and Section 204 of the Advisers Act and Rule 204-2(a)(7) 
thereunder. 
4. Wedbush’s supervisors, who were responsible for supervising junior employees, 
routinely communicated off-channel using their personal devices.  In fact, heads of divisions 
responsible for supervising junior employees themselves failed to comply with Wedbush’s 
policies by communicating using non-Wedbush approved methods on their personal devices 
about Wedbush’s broker-dealer and investment adviser businesses.  
5. Wedbush’s widespread failure to implement its policies and procedures that 
prohibit such communications led to its failure to reasonably supervise its employees within the 
meaning of Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers Act.    
6. During the time period that Wedbush failed to maintain and preserve off-channel 
communications their employees sent and received related to the broker-dealer and investment 
adviser’s businesses, Wedbush received and responded to Commission subpoenas for documents 
and records requests in numerous Commission investigations.  As a result, Wedbush’s 
recordkeeping failures likely impacted the Commission’s ability to carry out its regulatory 
functions and investigate violations of the federal securities laws across these investigations.   
 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  

3 
7. Commission staff uncovered Wedbush’s misconduct after commencing a risk-
based initiative to investigate the use of off-channel and unpreserved communications at broker-
dealers.  Wedbush has initiated a review of its recordkeeping failures and begun a program of 
remediation.  As set forth in the Undertakings below, Wedbush will retain an independent 
compliance consultant to review and assess Wedbush’s remedial steps relating to Wedbush’s 
recordkeeping practices, policies and procedures, related supervisory practices, and employment 
actions. 
Respondent 
8. Wedbush is a California corporation with its principal office in Los Angeles and is 
registered with the Commission as a broker-dealer and investment adviser. Wedbush is a wholly-
owned subsidiary of Wedbush Financial Services, LLC, a privately-held company. 
Recordkeeping Requirements under the Exchange and Advisers Acts 
9. Section 17(a)(1) of the Exchange Act and Section 204 of the Advisers Act 
authorize the Commission to issue rules requiring, respectively, broker-dealers and investment 
advisers, to make and keep for prescribed periods, and furnish copies of, such records as 
necessary or appropriate in the public interest, for the protection of investors or otherwise in 
furtherance of the purposes of the Exchange Act and the Advisers Act.  
10. T
he Commission adopted Rule 17a-4 under the Exchange Act and Rule 204-2 
under the Advisers Act pursuant to this authority.  These rules specify the manner and length of 
time that the records created in accordance with Commission rules, and certain other records 
produced by broker-dealers or investment advisers, must be maintained and produced promptly 
to Commission representatives. 
11. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 
17a-4(b)(4), require that broker-dealers preserve in an easily accessible place originals of all 
communications received and copies of all communications sent relating to the Wedbush’s 
business as such.  These rules impose minimum recordkeeping requirements that are based on 
standards a prudent broker-dealer should follow in the normal course of business.  
12. The rules adopted under Advisers Act Section 204, including Advisers Act Rule 
204-2(a)(7), require that investment advisers preserve in an easily accessible place originals of 
all communications received and copies of all written communications sent relating to, among 
other things, any recommendation made or proposed to be made and any advice given or proposed 
to be given. 
13. The Commission previously has stated that these and other recordkeeping 
requirements “are an integral part of the investor protection function of the Commission, and 
other securities regulators, in that the preserved records are the primary means of monitoring 
compliance with applicable securities laws, including antifraud provisions and financial 
responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 
Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 
with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 

4 
Wedbush’s Policies and Procedures 
14. Wedbush maintained certain policies and procedures designed to ensure the 
retention of business-related records, including electronic communications, in compliance with 
the relevant recordkeeping provisions.   
15. Wedbush employees were advised that the use of unapproved electronic 
communications methods, including on their personal devices, was not permitted, and they 
should preserve any personal email, chats or text messages sent or received for business 
purposes, by forwarding work-related communications to the firm’s compliance function.  
16. Messages sent through Wedbush-approved communications methods were 
monitored, subject to review, and, when appropriate, archived.  Absent steps taken by individual 
personnel to preserve work-related communications, messages sent on personal devices were not 
monitored, subject to review or archived. 
17. Wedbush policies were designed to address supervisors’ supervision of 
employees’ training in Wedbush’s communications policies and adherence to Wedbush’s books 
and recordkeeping requirements.  Supervisory policies notified employees that electronic 
communications were subject to surveillance by Wedbush.   
18. Wedbush, however, failed to implement a system of follow-up and review to 
determine that supervisors were reasonably following Wedbush’s policies.  While permitting 
employees to use approved communications methods, including on personal phones, for business 
communications, Wedbush failed to implement sufficient monitoring to assure that its 
recordkeeping and communications policies were being followed.  
Wedbush’s Recordkeeping Failures Across Its Businesses 
19. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  Wedbush cooperated with the investigation by voluntarily 
gathering and reviewing communications from the personal devices of a sampling of senior 
personnel.  These personnel included senior leadership, such as senior executives and numerous 
desk heads.   
20. The Commission staff’s investigation uncovered pervasive off-channel 
communications at all seniority levels of Wedbush’s broker-dealer and investment adviser.  The 
staff requested off-channel communications data from a sampling of broker-dealer and 
investment adviser personnel and found that all of the individuals had engaged in at least some 
level of off-channel communications.  Overall, these personnel sent and received numerous off-
channel communications, involving other Wedbush personnel, Wedbush’s broker-dealer 
customers, and other participants in the securities industry.  Within Wedbush, significant 
numbers of desk heads participated in off-channel communications. 
21. From at least January 2019, Wedbush broker-dealer personnel sent and received 
off-channel messages that concerned the broker-dealer’s business.  During this period, Wedbush 

5 
investment adviser personnel sent and received off-channel messages related to, among other 
things, providing and recommending investment advice to clients. 
22. For example, from November 2021 to October 2022, an Executive Vice President 
in Wedbush’s securities lending and fixed income departments exchanged numerous off-channel 
business-related messages with at least 32 Wedbush colleagues and personnel at other financial 
services firms.  Within Wedbush, this senior member of Wedbush’s securities lending and fixed 
income departments communicated off-channel with other division heads as well as more junior 
employees.  
23. In addition, from November 2021 to September 2022, an Executive Vice 
President in Wedbush’s Wealth Management division exchanged numerous off-channel 
business-related messages with at least 9 Wedbush colleagues, personnel at other financial 
services firms, and market participants.  Within Wedbush, this senior member of Wedbush’s 
Wealth Management division communicated off-channel with other division heads as well as 
more junior employees.  
Wedbush’s Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
24. Between January 2019 and October 2022, Wedbush received and responded to 
Commission subpoenas for documents and records requests in numerous Commission 
investigations.  By failing to maintain and preserve required records relating to its businesses, 
Wedbush likely deprived the Commission of these off-channel communications in various 
investigations. 
Wedbush’s Violations and Failure to Supervise 
25. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, Respondent willfully
2
 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder, which require broker-dealers to preserve for at least three years originals 
of all communications received and copies of all communications sent relating to its business as 
such.   
26. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, Respondent willfully violated Section 204 of the Advisers Act and Rule 204-
2(a)(7) thereunder, which require investment advisers to preserve in an easily accessible place 
originals of all    written communications received and copies of all    written communications sent 
 
2
  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act 
“‘means no more than that the person charged with the duty knows what he is doing.’”  
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 
977 (D.C. Cir. 1949)).   

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relating to, among other things, any recommendation made or proposed to be made and any advice 
given or proposed to be given. 
27. As a result of the conduct described above, Respondent failed reasonably to 
supervise their employees with a view to preventing or detecting certain of its employees’ aiding 
and abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder, 
within the meaning of Section 15(b)(4)(E) of the Exchange Act.  
28. As a result of the conduct described above, Respondent failed reasonably to 
supervise its employees with a view to preventing or detecting certain of its employees’ aiding 
and abetting violations of Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder, 
within the meaning of Section 203(e)(6) of the Advisers Act. 
Wedbush’s Remedial Efforts 
29. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Wedbush and cooperation afforded the Commission staff. 
Undertakings 
30. Prior to this action, Respondent enhanced its policies and procedures, and 
increased training concerning the use of approved communications methods, including on 
personal devices.  In addition, Respondent has undertaken to: 
31. Independent Compliance Consultant. 
a.  Wedbush shall retain, within thirty (30) days of the entry of this Order, the 
services of an independent compliance consultant (“Compliance Consultant”) that is not 
unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 
expenses shall be borne exclusively by Wedbush. 
 
b.  Wedbush will oversee the work of the Compliance Consultant. 
 
c.  Wedbush shall provide to the Commission staff, within sixty (60) days of the 
entry of this Order, a copy of the engagement letter detailing the Compliance 
Consultant’s responsibilities, which shall include a comprehensive compliance review as 
described below.  Wedbush shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 
 
i.  A comprehensive review of Wedbush’s supervisory, compliance, and 
other policies and procedures designed to ensure that Wedbush’s electronic 
communications, including those found on personal electronic devices, including 
without limitation, cellular phones (“Personal Devices”), are preserved in 
accordance with the requirements of the federal securities laws. 
 
ii.  A comprehensive review of training conducted by Wedbush to ensure 
personnel are complying with the requirements regarding the preservation of 

7 
electronic communications, including those found on Personal Devices, in 
accordance with the requirements of the federal securities laws, including by 
ensuring that Wedbush personnel certify in writing on a quarterly basis that they 
are complying with preservation requirements.  
 
iii.  An assessment of the surveillance program measures implemented by 
Wedbush to ensure compliance, on an ongoing basis, with the requirements found 
in the federal securities laws to preserve electronic communications, including 
those found on Personal Devices. 
 
iv.  An assessment of the technological solutions that Wedbush has begun 
implementing to meet the record retention requirements of the federal securities 
laws, including an assessment of the likelihood that Wedbush personnel will use 
the technological solutions going forward and a review of the measures employed 
by Wedbush to track employee usage of new technological solutions.  
 
v.  An assessment of the measures used by Wedbush to prevent the use of 
unauthorized communications methods for business communications by 
employees.  This assessment should include, but not be limited to, a review of 
Wedbush’s policies and procedures to ascertain if they provide for any significant 
technology and/or behavioral restrictions that help prevent the risk of the use of 
unapproved communications methods on Personal Devices (e.g., trading floor 
restrictions).   
 
vi.  A review of Wedbush’s electronic communications surveillance 
routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into 
Wedbush’s overall communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by Wedbush to 
address instances of non-compliance by Wedbush employees with Wedbush’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Wedbush business in the past.  This review shall include a survey of how 
Wedbush determined which employees failed to comply with Wedbush policies 
and procedures, the corrective action carried out, an evaluation of who violated 
policies and why, what penalties were imposed, and whether penalties were 
handed out consistently across business lines and seniority levels.   
 
d.  Wedbush shall require that, within forty-five (45) days after completion of the 
review set forth in sub-paragraphs c.i. through c.vii. above, the Compliance Consultant 
shall submit a detailed written report of its findings to Wedbush and to the Commission 
staff (the “Report”).  Wedbush shall require that the Report include a description of the 
review performed, the names of the individuals who performed the review, the 
conclusions reached, the Compliance Consultant’s recommendations for changes in or 
improvements to Wedbush’s policies and procedures, and a summary of the plan for 

8 
implementing the recommended changes in or improvements to Wedbush’s policies and 
procedures. 
 
e.  Wedbush shall adopt all recommendations contained in the Report within 
ninety (90) days of the date of the Report; provided, however, that within forty-five (45) 
days after the date of Report, Wedbush shall advise the Compliance Consultant and the 
Commission staff in writing of any recommendations that Wedbush considers to be 
unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 
that Wedbush considers unduly burdensome, impractical, or inappropriate, Wedbush 
need not adopt such recommendation at that time, but shall propose in writing an 
alternative policy, procedure, or disclosure designed to achieve the same objective or 
purpose. 
 
f.  As to any recommendation concerning Wedbush’s policies or procedures on 
which Wedbush and the Compliance Consultant do not agree, Wedbush and the 
Compliance Consultant shall attempt in good faith to reach an agreement within sixty 
(60) days after the date of the Report.  Within fifteen (15) days after the conclusion of the 
discussion and evaluation by Wedbush and the Compliance Consultant, Wedbush shall 
require that the Compliance Consultant inform Wedbush and the Commission staff in 
writing of the Compliance Consultant’s final determination concerning any 
recommendation that Wedbush considers to be unduly burdensome, impractical, or 
inappropriate.  Wedbush shall abide by the determinations of the Compliance Consultant 
and, within sixty (60) days after final agreement between Wedbush and the Compliance 
Consultant or final determination by the Compliance Consultant, whichever occurs first, 
Wedbush shall adopt and implement all of the recommendations that the Compliance 
Consultant deems appropriate. 
 
g.  Wedbush shall cooperate fully with the Compliance Consultant and shall 
provide the Compliance Consultant with access to such of Wedbush’s files, books, 
records, and personnel as are reasonably requested by the Compliance Consultant for 
review. 
 
h. Wedbush shall not have the authority to terminate the Compliance Consultant 
or substitute another compliance consultant for the initial Compliance Consultant, 
without the prior written approval of the Commission staff.  Wedbush shall compensate 
the Compliance Consultant and persons engaged to assist the Compliance Consultant for 
services rendered under this Order at their reasonable and customary rates. 
 
i.  For the period of engagement and for a period of two years from completion of 
the engagement, Respondent shall not (i) retain the Compliance C onsultant for any other 
professional services outside of the services described in this Order; (ii) enter into any 
other professional relationship with the Compliance Consultant, including any 
employment, consultant, attorney-client, auditing or other professional relationship; or 
(iii) enter, without prior written consent of the Commission staff, into any such 
professional relationship with any of the Compliance Consultant’s present or former 

9 
affiliates, employers, directors, officers, employees, or agents acting in their capacity as 
such.  
 
j.  The Report by the Compliance Consultant will likely include confidential 
financial, proprietary, competitive business or commercial information.  Public disclosure 
of the Report could discourage cooperation, impede pending or potential government 
investigations or undermine the objectives of the reporting requirement.  For these 
reasons, among others, the Report and the contents thereof are intended to remain and 
shall remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties 
in writing, (3) to the extent that the Commission determines in its sole discretion that 
disclosure would be in furtherance of the Commission’s discharge of its duties and 
responsibilities, or (4) is otherwise required by law. 
 
32. One-Year Evaluation.  Wedbush shall require the Compliance Consultant to 
assess Wedbush’s program for the preservation, as required under the federal securities laws, of 
electronic communications, including those found on Personal Devices, commencing one year 
after submitting the Report required by Paragraph 31.d above.  Wedbush shall require this review 
to evaluate Wedbush’s progress in the areas described in Paragraph 31.c.i-vii above.  After this 
review, Wedbush shall require the Compliance Consultant to submit a report (the “One Year 
Report”) to Wedbush and the Commission staff and shall ensure that the One Year Report 
includes an updated assessment of Wedbush’s policies and procedures with regard to the 
preservation of electronic communications (including those found on Personal Devices), training, 
surveillance programs, and technological solutions implemented in the prior year period.  
33. R
eporting Discipline Imposed.  For two years following the entry of this Order, 
Wedbush shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Wedbush, including, but not limited to, written warnings, loss of any pay, bonus, or 
incentive compensation, or the termination of employment, with respect to any employee found to 
have violated Wedbush’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices:  at least 48 hours before the filing of 
a Form U-5, or within ten (10) days of the imposition of other discipline.   
34. I
nternal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Wedbush will also have its Internal Audit function conduct a separate 
audit(s) to assess Wedbush’s progress in the areas described in Paragraph 31.c.i-vii above.  After 
completion of this audit(s), Wedbush shall ensure that Internal Audit submits a report to Wedbush 
and to the Commission staff. 
35. R
ecordkeeping.  Wedbush shall preserve, for a period of not less than six (6) 
years from the end of the fiscal year last used, the first two (2) years in an easily accessible place, 
any record of compliance with these undertakings. 
36. Deadlines.  For good cause shown, the Commission staff may extend any of the 
procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 
calendar days, except that if the last day falls on a weekend or federal holiday, the next business 
day shall be considered to be the last day. 

10 
37. Certification.  Wedbush shall certify, in writing, compliance with the 
undertakings set forth above.  The certification shall identify the undertakings, provide written 
evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to 
demonstrate compliance.  The Commission staff may make reasonable requests for further 
evidence of compliance, and Respondent agrees to provide such evidence.  The certification and 
supporting material shall be submitted to Alison R. Levine, Assistant Regional Director, 
Division of Enforcement, New York Regional Office, Securities and Exchange Commission, 100 
Pearl Street, Suite 20-100, New York, NY, 10004-2616, or such other person as the Commission 
staff may request, with a copy to the Office of Chief Counsel of the Enforcement Division, no 
later than sixty (60) days from the date of the completion of the undertakings. 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Sections 
203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 
 
B. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 
 
C. Respondent is censured.  
 
D. Respondent shall comply with the undertakings enumerated in paragraphs 31 to 
37 above. 
  
 E. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $10,000,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C.  § 3717.   
 
 Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 

11 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Wedbush as a Respondent in these proceedings, and the file number of these proceedings; a copy 
of the cover letter and check or money order must be sent to Thomas P. Smith, Jr., Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 
Street, Suite 20-100, New York, New York 10004-2616.   
 
 F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
        Secretary 

UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 98074 / August 8, 2023 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6369 / August 8, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21550 
 
 
In the Matter of 
 

Wedbush Securities Inc., 
 
Respondent. 

ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTIONS 15(b) AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934 
AND SECTIONS 203(e) AND 203(k) OF 
THE INVESTMENT ADVISERS ACT OF 
1940, MAKING FINDINGS, AND 
IMPOSING REMEDIAL SANCTIONS 
AND A CEASE-AND-DESIST ORDER 
 
 

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 
(“Exchange Act”) and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Wedbush Securities Inc. (“Respondent” or “Wedbush”). 

 
II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, and Sections 203(e) 
and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial 
Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 



2 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that 
 

Summary 

1. The federal securities laws impose recordkeeping requirements on broker-dealers 
and registered investment advisers to ensure that they responsibly discharge their crucial role in 
our markets.  The Commission has long said that compliance with these requirements is essential 
to investor protection and the Commission’s efforts to further its mandate of protecting investors, 
maintaining fair, orderly, and efficient markets, and facilitating capital formation. 

2. These proceedings arise out of the widespread and longstanding failure of 
Wedbush employees throughout Wedbush, including at senior levels, to adhere to certain of 
these essential requirements and Wedbush’s own policies.  Using their personal devices, these 
employees communicated both internally and externally by personal text messages, or other text 
messaging platforms such as WhatsApp (“off-channel communications”). 

3. From at least January 2019, Wedbush employees sent and received off-channel 
communications that related to the business of the broker-dealer and registered investment 
adviser operated by Wedbush.  Respondent did not maintain or preserve the substantial majority 
of these written communications.  Respondent’s failure was firm-wide, and involved employees 
at all levels of authority.  As a result, Wedbush violated Section 17(a) of the Exchange Act and 
Rule 17a-4(b)(4) thereunder and Section 204 of the Advisers Act and Rule 204-2(a)(7) 
thereunder. 

4. Wedbush’s supervisors, who were responsible for supervising junior employees, 
routinely communicated off-channel using their personal devices.  In fact, heads of divisions 
responsible for supervising junior employees themselves failed to comply with Wedbush’s 
policies by communicating using non-Wedbush approved methods on their personal devices 
about Wedbush’s broker-dealer and investment adviser businesses.  

5. Wedbush’s widespread failure to implement its policies and procedures that 
prohibit such communications led to its failure to reasonably supervise its employees within the 
meaning of Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers Act.    

6. During the time period that Wedbush failed to maintain and preserve off-channel 
communications their employees sent and received related to the broker-dealer and investment 
adviser’s businesses, Wedbush received and responded to Commission subpoenas for documents 
and records requests in numerous Commission investigations.  As a result, Wedbush’s 
recordkeeping failures likely impacted the Commission’s ability to carry out its regulatory 
functions and investigate violations of the federal securities laws across these investigations.   

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  



3 

7. Commission staff uncovered Wedbush’s misconduct after commencing a risk-
based initiative to investigate the use of off-channel and unpreserved communications at broker-
dealers.  Wedbush has initiated a review of its recordkeeping failures and begun a program of 
remediation.  As set forth in the Undertakings below, Wedbush will retain an independent 
compliance consultant to review and assess Wedbush’s remedial steps relating to Wedbush’s 
recordkeeping practices, policies and procedures, related supervisory practices, and employment 
actions. 

Respondent 

8. Wedbush is a California corporation with its principal office in Los Angeles and is 
registered with the Commission as a broker-dealer and investment adviser. Wedbush is a wholly-
owned subsidiary of Wedbush Financial Services, LLC, a privately-held company. 

Recordkeeping Requirements under the Exchange and Advisers Acts 

9. Section 17(a)(1) of the Exchange Act and Section 204 of the Advisers Act 
authorize the Commission to issue rules requiring, respectively, broker-dealers and investment 
advisers, to make and keep for prescribed periods, and furnish copies of, such records as 
necessary or appropriate in the public interest, for the protection of investors or otherwise in 
furtherance of the purposes of the Exchange Act and the Advisers Act.  

10. The Commission adopted Rule 17a-4 under the Exchange Act and Rule 204-2 
under the Advisers Act pursuant to this authority.  These rules specify the manner and length of 
time that the records created in accordance with Commission rules, and certain other records 
produced by broker-dealers or investment advisers, must be maintained and produced promptly 
to Commission representatives. 

11. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 
17a-4(b)(4), require that broker-dealers preserve in an easily accessible place originals of all 
communications received and copies of all communications sent relating to the Wedbush’s 
business as such.  These rules impose minimum recordkeeping requirements that are based on 
standards a prudent broker-dealer should follow in the normal course of business.  

12. The rules adopted under Advisers Act Section 204, including Advisers Act Rule 
204-2(a)(7), require that investment advisers preserve in an easily accessible place originals of 
all communications received and copies of all written communications sent relating to, among 
other things, any recommendation made or proposed to be made and any advice given or proposed 
to be given. 

13. The Commission previously has stated that these and other recordkeeping 
requirements “are an integral part of the investor protection function of the Commission, and 
other securities regulators, in that the preserved records are the primary means of monitoring 
compliance with applicable securities laws, including antifraud provisions and financial 
responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 
Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 
with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 



4 

Wedbush’s Policies and Procedures 

14. Wedbush maintained certain policies and procedures designed to ensure the 
retention of business-related records, including electronic communications, in compliance with 
the relevant recordkeeping provisions.   

15. Wedbush employees were advised that the use of unapproved electronic 
communications methods, including on their personal devices, was not permitted, and they 
should preserve any personal email, chats or text messages sent or received for business 
purposes, by forwarding work-related communications to the firm’s compliance function.  

16. Messages sent through Wedbush-approved communications methods were 
monitored, subject to review, and, when appropriate, archived.  Absent steps taken by individual 
personnel to preserve work-related communications, messages sent on personal devices were not 
monitored, subject to review or archived. 

17. Wedbush policies were designed to address supervisors’ supervision of 
employees’ training in Wedbush’s communications policies and adherence to Wedbush’s books 
and recordkeeping requirements.  Supervisory policies notified employees that electronic 
communications were subject to surveillance by Wedbush.   

18. Wedbush, however, failed to implement a system of follow-up and review to 
determine that supervisors were reasonably following Wedbush’s policies.  While permitting 
employees to use approved communications methods, including on personal phones, for business 
communications, Wedbush failed to implement sufficient monitoring to assure that its 
recordkeeping and communications policies were being followed.  

Wedbush’s Recordkeeping Failures Across Its Businesses 

19. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  Wedbush cooperated with the investigation by voluntarily 
gathering and reviewing communications from the personal devices of a sampling of senior 
personnel.  These personnel included senior leadership, such as senior executives and numerous 
desk heads.   

20. The Commission staff’s investigation uncovered pervasive off-channel 
communications at all seniority levels of Wedbush’s broker-dealer and investment adviser.  The 
staff requested off-channel communications data from a sampling of broker-dealer and 
investment adviser personnel and found that all of the individuals had engaged in at least some 
level of off-channel communications.  Overall, these personnel sent and received numerous off-
channel communications, involving other Wedbush personnel, Wedbush’s broker-dealer 
customers, and other participants in the securities industry.  Within Wedbush, significant 
numbers of desk heads participated in off-channel communications. 

21. From at least January 2019, Wedbush broker-dealer personnel sent and received 
off-channel messages that concerned the broker-dealer’s business.  During this period, Wedbush 



5 

investment adviser personnel sent and received off-channel messages related to, among other 
things, providing and recommending investment advice to clients. 

22. For example, from November 2021 to October 2022, an Executive Vice President 
in Wedbush’s securities lending and fixed income departments exchanged numerous off-channel 
business-related messages with at least 32 Wedbush colleagues and personnel at other financial 
services firms.  Within Wedbush, this senior member of Wedbush’s securities lending and fixed 
income departments communicated off-channel with other division heads as well as more junior 
employees.  

23. In addition, from November 2021 to September 2022, an Executive Vice 
President in Wedbush’s Wealth Management division exchanged numerous off-channel 
business-related messages with at least 9 Wedbush colleagues, personnel at other financial 
services firms, and market participants.  Within Wedbush, this senior member of Wedbush’s 
Wealth Management division communicated off-channel with other division heads as well as 
more junior employees.  

Wedbush’s Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 

24. Between January 2019 and October 2022, Wedbush received and responded to 
Commission subpoenas for documents and records requests in numerous Commission 
investigations.  By failing to maintain and preserve required records relating to its businesses, 
Wedbush likely deprived the Commission of these off-channel communications in various 
investigations. 

Wedbush’s Violations and Failure to Supervise 

25. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, Respondent willfully2 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder, which require broker-dealers to preserve for at least three years originals 
of all communications received and copies of all communications sent relating to its business as 
such.   

26. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, Respondent willfully violated Section 204 of the Advisers Act and Rule 204-
2(a)(7) thereunder, which require investment advisers to preserve in an easily accessible place 
originals of all written communications received and copies of all written communications sent 

 
2  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act 
“‘means no more than that the person charged with the duty knows what he is doing.’”  
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 
977 (D.C. Cir. 1949)).   



6 

relating to, among other things, any recommendation made or proposed to be made and any advice 
given or proposed to be given. 

27. As a result of the conduct described above, Respondent failed reasonably to 
supervise their employees with a view to preventing or detecting certain of its employees’ aiding 
and abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder, 
within the meaning of Section 15(b)(4)(E) of the Exchange Act.  

28. As a result of the conduct described above, Respondent failed reasonably to 
supervise its employees with a view to preventing or detecting certain of its employees’ aiding 
and abetting violations of Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder, 
within the meaning of Section 203(e)(6) of the Advisers Act. 

Wedbush’s Remedial Efforts 

29. In determining to accept the Offer, the Commission considered remedial acts 
promptly undertaken by Wedbush and cooperation afforded the Commission staff. 

Undertakings 

30. Prior to this action, Respondent enhanced its policies and procedures, and 
increased training concerning the use of approved communications methods, including on 
personal devices.  In addition, Respondent has undertaken to: 

31. Independent Compliance Consultant. 

a.  Wedbush shall retain, within thirty (30) days of the entry of this Order, the 
services of an independent compliance consultant (“Compliance Consultant”) that is not 
unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 
expenses shall be borne exclusively by Wedbush. 

 
b.  Wedbush will oversee the work of the Compliance Consultant. 
 
c.  Wedbush shall provide to the Commission staff, within sixty (60) days of the 

entry of this Order, a copy of the engagement letter detailing the Compliance 
Consultant’s responsibilities, which shall include a comprehensive compliance review as 
described below.  Wedbush shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 

 
i.  A comprehensive review of Wedbush’s supervisory, compliance, and 

other policies and procedures designed to ensure that Wedbush’s electronic 
communications, including those found on personal electronic devices, including 
without limitation, cellular phones (“Personal Devices”), are preserved in 
accordance with the requirements of the federal securities laws. 

 
ii.  A comprehensive review of training conducted by Wedbush to ensure 

personnel are complying with the requirements regarding the preservation of 



7 

electronic communications, including those found on Personal Devices, in 
accordance with the requirements of the federal securities laws, including by 
ensuring that Wedbush personnel certify in writing on a quarterly basis that they 
are complying with preservation requirements.  

 
iii.  An assessment of the surveillance program measures implemented by 

Wedbush to ensure compliance, on an ongoing basis, with the requirements found 
in the federal securities laws to preserve electronic communications, including 
those found on Personal Devices. 

 
iv.  An assessment of the technological solutions that Wedbush has begun 

implementing to meet the record retention requirements of the federal securities 
laws, including an assessment of the likelihood that Wedbush personnel will use 
the technological solutions going forward and a review of the measures employed 
by Wedbush to track employee usage of new technological solutions.  

 
v.  An assessment of the measures used by Wedbush to prevent the use of 

unauthorized communications methods for business communications by 
employees.  This assessment should include, but not be limited to, a review of 
Wedbush’s policies and procedures to ascertain if they provide for any significant 
technology and/or behavioral restrictions that help prevent the risk of the use of 
unapproved communications methods on Personal Devices (e.g., trading floor 
restrictions).   

 
vi.  A review of Wedbush’s electronic communications surveillance 

routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into 
Wedbush’s overall communications surveillance program.   

 
vii.  A comprehensive review of the framework adopted by Wedbush to 

address instances of non-compliance by Wedbush employees with Wedbush’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Wedbush business in the past.  This review shall include a survey of how 
Wedbush determined which employees failed to comply with Wedbush policies 
and procedures, the corrective action carried out, an evaluation of who violated 
policies and why, what penalties were imposed, and whether penalties were 
handed out consistently across business lines and seniority levels.   

 
d.  Wedbush shall require that, within forty-five (45) days after completion of the 

review set forth in sub-paragraphs c.i. through c.vii. above, the Compliance Consultant 
shall submit a detailed written report of its findings to Wedbush and to the Commission 
staff (the “Report”).  Wedbush shall require that the Report include a description of the 
review performed, the names of the individuals who performed the review, the 
conclusions reached, the Compliance Consultant’s recommendations for changes in or 
improvements to Wedbush’s policies and procedures, and a summary of the plan for 



8 

implementing the recommended changes in or improvements to Wedbush’s policies and 
procedures. 

 
e.  Wedbush shall adopt all recommendations contained in the Report within 

ninety (90) days of the date of the Report; provided, however, that within forty-five (45) 
days after the date of Report, Wedbush shall advise the Compliance Consultant and the 
Commission staff in writing of any recommendations that Wedbush considers to be 
unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 
that Wedbush considers unduly burdensome, impractical, or inappropriate, Wedbush 
need not adopt such recommendation at that time, but shall propose in writing an 
alternative policy, procedure, or disclosure designed to achieve the same objective or 
purpose. 

 
f.  As to any recommendation concerning Wedbush’s policies or procedures on 

which Wedbush and the Compliance Consultant do not agree, Wedbush and the 
Compliance Consultant shall attempt in good faith to reach an agreement within sixty 
(60) days after the date of the Report.  Within fifteen (15) days after the conclusion of the 
discussion and evaluation by Wedbush and the Compliance Consultant, Wedbush shall 
require that the Compliance Consultant inform Wedbush and the Commission staff in 
writing of the Compliance Consultant’s final determination concerning any 
recommendation that Wedbush considers to be unduly burdensome, impractical, or 
inappropriate.  Wedbush shall abide by the determinations of the Compliance Consultant 
and, within sixty (60) days after final agreement between Wedbush and the Compliance 
Consultant or final determination by the Compliance Consultant, whichever occurs first, 
Wedbush shall adopt and implement all of the recommendations that the Compliance 
Consultant deems appropriate. 

 
g.  Wedbush shall cooperate fully with the Compliance Consultant and shall 

provide the Compliance Consultant with access to such of Wedbush’s files, books, 
records, and personnel as are reasonably requested by the Compliance Consultant for 
review. 

 
h. Wedbush shall not have the authority to terminate the Compliance Consultant 

or substitute another compliance consultant for the initial Compliance Consultant, 
without the prior written approval of the Commission staff.  Wedbush shall compensate 
the Compliance Consultant and persons engaged to assist the Compliance Consultant for 
services rendered under this Order at their reasonable and customary rates. 

 
i.  For the period of engagement and for a period of two years from completion of 

the engagement, Respondent shall not (i) retain the Compliance Consultant for any other 
professional services outside of the services described in this Order; (ii) enter into any 
other professional relationship with the Compliance Consultant, including any 
employment, consultant, attorney-client, auditing or other professional relationship; or 
(iii) enter, without prior written consent of the Commission staff, into any such 
professional relationship with any of the Compliance Consultant’s present or former 



9 

affiliates, employers, directors, officers, employees, or agents acting in their capacity as 
such.  

 
j.  The Report by the Compliance Consultant will likely include confidential 

financial, proprietary, competitive business or commercial information.  Public disclosure 
of the Report could discourage cooperation, impede pending or potential government 
investigations or undermine the objectives of the reporting requirement.  For these 
reasons, among others, the Report and the contents thereof are intended to remain and 
shall remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties 
in writing, (3) to the extent that the Commission determines in its sole discretion that 
disclosure would be in furtherance of the Commission’s discharge of its duties and 
responsibilities, or (4) is otherwise required by law. 

 
32. One-Year Evaluation.  Wedbush shall require the Compliance Consultant to 

assess Wedbush’s program for the preservation, as required under the federal securities laws, of 
electronic communications, including those found on Personal Devices, commencing one year 
after submitting the Report required by Paragraph 31.d above.  Wedbush shall require this review 
to evaluate Wedbush’s progress in the areas described in Paragraph 31.c.i-vii above.  After this 
review, Wedbush shall require the Compliance Consultant to submit a report (the “One Year 
Report”) to Wedbush and the Commission staff and shall ensure that the One Year Report 
includes an updated assessment of Wedbush’s policies and procedures with regard to the 
preservation of electronic communications (including those found on Personal Devices), training, 
surveillance programs, and technological solutions implemented in the prior year period.  

33. Reporting Discipline Imposed.  For two years following the entry of this Order, 
Wedbush shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Wedbush, including, but not limited to, written warnings, loss of any pay, bonus, or 
incentive compensation, or the termination of employment, with respect to any employee found to 
have violated Wedbush’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices:  at least 48 hours before the filing of 
a Form U-5, or within ten (10) days of the imposition of other discipline.   

34. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Wedbush will also have its Internal Audit function conduct a separate 
audit(s) to assess Wedbush’s progress in the areas described in Paragraph 31.c.i-vii above.  After 
completion of this audit(s), Wedbush shall ensure that Internal Audit submits a report to Wedbush 
and to the Commission staff. 

35. Recordkeeping.  Wedbush shall preserve, for a period of not less than six (6) 
years from the end of the fiscal year last used, the first two (2) years in an easily accessible place, 
any record of compliance with these undertakings. 

36. Deadlines.  For good cause shown, the Commission staff may extend any of the 
procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 
calendar days, except that if the last day falls on a weekend or federal holiday, the next business 
day shall be considered to be the last day. 



10 

37. Certification.  Wedbush shall certify, in writing, compliance with the 
undertakings set forth above.  The certification shall identify the undertakings, provide written 
evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to 
demonstrate compliance.  The Commission staff may make reasonable requests for further 
evidence of compliance, and Respondent agrees to provide such evidence.  The certification and 
supporting material shall be submitted to Alison R. Levine, Assistant Regional Director, 
Division of Enforcement, New York Regional Office, Securities and Exchange Commission, 100 
Pearl Street, Suite 20-100, New York, NY, 10004-2616, or such other person as the Commission 
staff may request, with a copy to the Office of Chief Counsel of the Enforcement Division, no 
later than sixty (60) days from the date of the completion of the undertakings. 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Sections 
203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 
 

B. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 

 
C. Respondent is censured.  
 
D. Respondent shall comply with the undertakings enumerated in paragraphs 31 to 

37 above. 
  
 E. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $10,000,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C.  § 3717.   
 
 Payment must be made in one of the following ways:   
 

(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  

 
(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 



11 

(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  

 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 

 
Payments by check or money order must be accompanied by a cover letter identifying 

Wedbush as a Respondent in these proceedings, and the file number of these proceedings; a copy 
of the cover letter and check or money order must be sent to Thomas P. Smith, Jr., Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 
Street, Suite 20-100, New York, New York 10004-2616.   
 
 F. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 

Vanessa A. Countryman 
        Secretary 


	UNITED STATES OF AMERICA
	In the Matter of
	Respondent.
	I.
	II.
	III.
	Summary
	Respondent
	Wedbush’s Policies and Procedures
	Wedbush’s Recordkeeping Failures Across Its Businesses
	Wedbush’s Failure to Preserve Required Records Potentially Compromised and Delayed Commission Matters
	Wedbush’s Violations and Failure to Supervise
	Wedbush’s Remedial Efforts
	Undertakings

	IV.