The Securities and Exchange Commission announced charges against Wedbush Securities Inc. for failing to supervise employee Timary Delorme after the broker-dealer ignored numerous red flags indicating that Delorme was involved in a long-running pump-and-dump scheme targeting retail investors. Delorme agreed to settle fraud charges stemming from the same scheme. This is the second SEC action against Wedbush this year and the third since 2014.The SEC's investigation found that Delorme - a registered representative of Wedbush - received undisclosed benefits for investing her customers in microcap stocks that were the subject of a "pump-and-dump" scheme orchestrated by Izak Zirk Engelbrecht, who was previously charged by the Commission and criminal authorities in separate actions. According to the SEC's order, Wedbush ignored multiple signs of Delorme's fraud, including a customer email outlining Delorme's involvement in the scheme and multiple FINRA arbitrations and inquiries regarding her penny stock trading activity. In response to these clear red flags, Wedbush conducted two flawed and insufficient investigations into Delorme's conduct but failed to take appropriate action.
Savoie, in violation ofFINRA Rules 8210 and 2010, refused to respond to FINRA requests for information and documents issued pursuant to FINRA Rule 8210 in connection with an investigation that he misappropriated more than $665,000 from at least one firm customer.