The Securities and Exchange Commission has charged Wedbush Securities, ranked as one of the five largest firms by trading volume on NASDAQ, and two officials accused of violating the agency’s market access rule that requires firms to have adequate risk controls in place.

The Securities and Exchange Commission has announced charges against Wedbush Securities, ranked as one of the five largest firms by trading volume on NASDAQ, and two officials accused of violating the agency’s market access rule that requires firms to have adequate risk controls in place.

The SEC’s Enforcement Division alleges that Wedbush failed to maintain “direct and exclusive” control over settings in trading platforms used by clients to send orders to the markets from July 2011 to 2013. 

The SEC alleges that the firm’s market violations 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.

“Wedbush provided market access to overseas traders without preapproval and without ensuring that they complied with US law,” said Andrew Ceresney, director of the SEC Enforcement Division. “We will hold Wedbush accountable for reaping substantial profits while failing to protect US markets from the risks posed by these traders.”

“The market access rule was adopted out of concerns that some broker-dealers did not have effective controls in place for their market access. This enforcement action against Wedbush is a cornerstone of our ongoing efforts to hold accountable any broker-dealers who fail to effectively implement market access controls and procedures,” added Daniel Hawke, chief of the SEC Enforcement Division’s market abuse unit.

The proceeding before an administrative law judge will determine whether the firm “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.  The judge also will decide what sanctions, if any, are appropriate,” the SEC said.