SEC: Wedbush Pays $250K for Failing to Supervise Barred Broker Timary Delorme
Wedbush Securities has agreed to a censure and $250,000 penalty to settle allegations with the Securities Exchange Commission (SEC) that it failed to supervise one of its registered brokers implicated in a pump-and-dump scheme, Timary Delorme.
Delorme, a former Los Angeles / Orange County area broker, was barred from the securities industry by the SEC in March of 2018 in connection to an alleged pump-and-dump scheme which defrauded retail investors. She was a was a Wedbush broker for more than 40 years. The SEC alleged that Delorme was working a scam with Izak Zirk Engelbrecht, who pleaded guilty in 2014 to state and federal fraud charges and was sentenced to 12 years in prison. The SEC alleged that Engelbrecht had been manipulating stock prices (a pump-and-dump) using stocks he and other associates controlled. The SEC claims that as part of the scheme, Delorme purchased these stocks in client accounts in return for undisclosed benefits.
Wedbush SEC Settlement
According to an SEC press release, Wedbush breached its fiduciary duty to customers by “looking the other way” despite mounting evidence Delorme was involved in manipulative and fraudulent conduct. According to the SEC, Wedbush:
- “Ignored numerous red flags” indicating Delorme was involved in a long-standing fraud targeting retail investors;
- Conducted a pair of “flawed and insufficient” internal investigations into Delorme’s action; and
- Failed to appropriately act as a supervisor and protect investors.
The SEC has acknowledged steps Wedbush has taken to improve representative oversight since the allegations, such as senior leadership shake-ups, policy and procedure revisions, electronic surveillance improvements, and allocating additional resources for internal auditing. However, those changes come too late for investors who lost money due to Delorme’s alleged fraud, and the firm’s alleged supervisory failures.
Did You Lose Money Investing with Timary Delorme?
Wedbush Securities has also been admonished for failing to supervise Delorme, and failing to employ reasonable policies which would enable the firm to spot fraud and uphold their legal and fiduciary duties. As such, the firm can potentially be held liable for losses suffered by investors who lost money with Timary Delorme.
If you lost money investing with Timary Delorme or Wedbush Securities, an investment fraud attorney from Meyer Wilson is available to help you better understand your available rights and options. Call (888) 390-6491 or contact us online to speak with a lawyer.