New York Securities Lawyer Blog
On March 27, 2018 the Securities and Exchange Commission (“SEC”) announced charges against Wedbush Securities Inc. (“Wedbush”) for failing to supervise employee Timary Delorme (“Delorme”). The SEC Complaint alleges that Wedbush repeatedly failed to monitor or prevent Delorme’s activities, despite numerous red flags that Delorme was engaging in illicit activities.
The SEC complaint further alleges that Delorme was working in concert with Izak Engelbrecht — who was previously charged by the Commission and criminal authorities in separate actions – and received kickbacks and undisclosed benefits from Engelbrecht in exchange for buying penny stocks in customer accounts. Wedbush failed to flag these high risk, unsuitable penny stock transactions, and failed to halt this fraudulent kickback scheme despite multiple FINRA inquiries regarding Delorme’s penny stock trading activity, and a customer complaint email to Wedbush detailing the specific scheme Delorme was engaged in.
A separate order against Delorme found that she had violated federal securities laws. Without admitting or denying the findings, Delorme agreed to pay a $50,000 fine, and to a lifetime ban from the securities industry. SEC Officer Marc P. Berger, Director of the New York Regional Office, issued a statement in regards to this investigation, saying “Brokerage firms play an important role in protecting retail investors from abusive conduct by brokers like Delorme; this case sends a clear message that we will not tolerate broker-dealers that fail to exercise appropriate supervision over employees, as alleged here.”
The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of investment and securities fraud. If you are a victim of fraud, please contact Lax & Neville LLP today at (212) 696-1999 to schedule a consultation.