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SEC Charges Wedbush Securities with Unregistered Sales of Microcap Securities and Failing to Report Suspicious Transactions

The SEC announced that Wedbush has agreed to pay more than $1.2 million to settle charges arising from the unlawful, unregistered distribution of nearly 100 million shares of more than 50 different microcap companies.  In addition, Wedbush failed to file suspicious activity reports (SARs) in reference to these transactions.

According to the SEC’s Order, Wedbush engaged in unregistered offers and sales of large blocks of low-priced securities by an offshore customer.  Wedbush held a brokerage account for Silverton SA, now known as Wintercap, S, a purported Swiss assets manager.  The activity in Silverton’s account reflected a pattern of depositing them low priced securities, selling a large quantity of these shares soon after depositing them and withdrawing the proceeds.  Silverton’s business model enabled individuals or groups scheming to conceal their ownership of and control over public companies to fraudulently sell stock to investors.  Despite the presence of numerous red flags that Wedbush had identified in its written guidance to employees, it failed to file SARs for the transactions it executed on behalf of its offshore customer, as required to do when transactions are suspected to involve fraudulent activity.

Wedbush agreed to cease and desist from committing or causing violations of these provisions; to be censured; payment of disgorgement and prejudgment interest of over $207,000 and a civil penalty of $1 million.  Additionally, in 2018, the SEC and US Attorney’s Office for the District of Massachusetts brought parallel actions against a number of related parties, including Silverton’s principal, Roger Knox, for the alleged fraudulent scheme.

If you wish to discuss any securities related questions, please contact David A. Weintraub, P.A. 7805 SW 6th Court, Plantation, FL  33324.  By phone 954-693-7577 or 800-718-1422.