The Enforcement Division alleges that the firm's violations of the market access rule were caused by Jeffrey Bell, the former executive vice president in charge of Wedbush's market access business, and Christina Fillhart, a senior vice president in the market access division.
Fillhart also had responsibility for overseeing Wedbush's market access business and received inquiries by exchanges about potential violations by Wedbush and its customers.
Despite these red flags, Fillhart
did not take adequate steps to prompt the firm to adopt reasonably designed risk management controls.
According to the SEC's order, in addition to violating the market access rule (Securities Exchange Act Rule 15c3-5), Wedbush
violated other regulatory requirements as a result of trading by its market access customers.
These violations include Rule 203(b)(1) of Regulation SHO relating to short sales, Rule 611(c) of Regulation NMS related to intermarket sweep orders, Rule 17a-8 concerning anti-money laundering requirements, and Rule 17a-4(b)(4) concerning the preservation of records.
The proceeding before an administrative law judge will determine whether Wedbush
willfully violated these provisions of the federal securities laws, and whether Bell and Fillhart
were causes of the firm's violations of the market access rule.