Release Number 8763-23
CFTC Orders a Los Angeles Futures Commission Merchant to Pay $6 Million for Recordkeeping and Supervision Failures for Widespread Use of Unapproved Communication Methods
August 08, 2023
Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Wedbush Securities Inc., a Los Angeles, California-based registered futures commission merchant, for failing to maintain, preserve, or produce records required to be kept under CFTC recordkeeping requirements, and failing to diligently supervise matters related to its business as a CFTC registrant. Wedbush admits the facts in the order and acknowledges the conduct violated the Commodity Exchange Act and CFTC regulations.
The order requires Wedbush to pay a $6 million civil monetary penalty, to cease and desist from further violations of recordkeeping and supervision requirements, and to take specific remedial actions as written in the order.
“As this action demonstrates, all CFTC registrants must comply with their fundamental recordkeeping obligations,” said Director of Enforcement Ian McGinley. “The CFTC’s recordkeeping and supervision requirements are central to its oversight of the U.S. derivatives markets and registrants. The CFTC will continue to pursue all registrants who fail to comply with these core obligations.”
The order finds that from approximately 2018 to the present, Wedbush employees, including those at senior levels, communicated both internally and externally on unapproved channels, including via personal text messages. Wedbush employees sent and received the written communications, which included messages related to Wedbush’s business as a CFTC registrant. These messages were required to be maintained under CFTC-mandated recordkeeping requirements. The order finds Wedbush did not maintain or preserve thousands of communications, including communications related to its commodities business. Additionally, Wedbush generally would not have been able to provide the communications promptly to a CFTC representative when requested.
Related Civil Action
The Securities and Exchange Commission today also announced an order filing and settling charges against Wedbush and imposing a civil monetary penalty for related recordkeeping and supervision violations.
The Division of Enforcement staff responsible for this case are Jonah E. McCarthy, A. Daniel Ullman II, and Paul G. Hayeck.