Wedbush Securities, a reputable financial firm, has reached a settlement agreement to pay $350,000 over allegations surrounding a significant hacking incident. As per regulators, this security breach resulted in the theft of millions of dollars worth of client assets.
Over a span of nine days, Wedbush carried out transfers exceeding $6.6 million under the directions of the hacker, redirecting the funds to two third-party recipients. These recipients were located in foreign countries and had no prior association with the customers involved, further raising suspicions.
Importantly, Wedbush settled the matter without admitting or denying the allegations brought against them. They opted not to comment on the situation when approached by media outlets.
Based on the settlement letter, it is alleged that Wedbush neglected to adequately investigate numerous red flags associated with these wire requests. The fact that large and increasing sums of money were being transferred within a short timeframe was evidently suspicious. Additionally, the transfers were being sent to third-party recipients situated in different countries, without any apparent connection to the clients. It is also worth noting that Wedbush failed to make any effort to contact the representative whose email account had been compromised, adding to the list of concerning oversights.
This settlement serves as a reminder of the importance of robust cybersecurity measures for financial institutions, as well as the need for diligent and thorough investigation into any suspicious activities that may threaten the security of client assets.
Ultimately, Wedbush Securities has taken responsibility for their shortcomings in this incident, reaching a settlement to rectify the potential harm caused to their clients.
Securities Firm Wedbush Faces Disciplinary Actions
One of these violations occurred last November when Finra fined the firm $850,000 for allegedly neglecting to establish systems to ensure the accuracy of its account statements. Consequently, clients received erroneous statements indicating that their bonds were making interest payments, when in reality, they were in default.
In addition to this, Wedbush recently incurred fines totaling $16 million due to employees conducting business on unapproved communication channels in August. The firm also settled a $975,000 case with Finra in January, resolving allegations that they failed to adequately monitor trading activity to prevent market manipulation.
Following the hacking incident, Wedbush and their partner firm successfully reimbursed their affected clients for the stolen funds. In response to the incident, Wedbush has accepted a censure and pledged to revamp their supervisory procedures.