According to the SEC’s order, Wedbush Securities blatantly ignored numerous signs of Delorme’s fraud. For instance, the signs include multiple FINRA arbitrations and inquiries regarding her penny stock trading activity, along with a client email outlining Delorme’s involvement in the pump-and-dump scheme. In response to the flagrant violations, Wedbush made a half-baked attempt to conduct investigations into Delorme’s behavior. In the end, Wedbush failed to take appropriate action.
Lackluster Penalty
At least the SEC’s order instituting administrative proceedings against Wedbush Securities states the broker-dealer failed to reasonably supervise Delorme. In short, the firm did not do enough to prevent and detect Delorme’s violations. This is the second SEC action against Wedbush in 2018, and the third since 2014.
As for Delorme, the SEC acknowledges she is in clear violation of antifraud provisions of federal securities laws. As is customary in the securities industry, admitting or denying the findings is optional; so it seems. Nonetheless, and to make the problem go away, Delorme agrees to pay a $50,000 penalty. Additionally, the SEC imposes industry and penny stock bars along with a cease and desist order from future violations.
