Wedbush wealth management had ‘pervasive’ texting problems: SEC

investmentnews.com:

Wall Street regulators Tuesday hit broker-dealers with another round of hundreds of millions of dollars in penalties for failing to catch executives and traders using unofficial communications like WhatsApp.

But of the 11 firms that agreed to pay $289 million to settle the matter with the Securities and Exchange Commission, only one, Wedbush Securities Inc., had its wealth management operations cited directly in the settlement, with the SEC claiming “pervasive off-channel communications at all seniority levels of Wedbush’s broker-dealer and investment advisor.”

Regulators have been taking firms to task over executives, bankers and traders communicating through various messaging platforms on their personal devices, including iMessage, WhatsApp and Signal, about the business of their employers.

Last September, regulators reached settlements with more than a dozen banks in a sprawling probe into how global financial firms failed to monitor employees’ communications on unauthorized messaging apps, bringing total penalties in the matter to more than $2 billion. Finance firms like broker-dealers are required to scrupulously monitor communications involving their business to head off improper conduct. 

Los Angeles-based Wedbush Securities has 550 registered reps in 69 branch offices. The firm has had a history of failing to supervise certain trades that resulted in scrutiny from regulators and penalties.

“From at least January 2019, Wedbush broker-dealer personnel sent and received off-channel messages that concerned the broker-dealer’s business,” according to the SEC. “During this period, Wedbush investment advisor personnel sent and received off-channel messages related to, among other things, providing and recommending