Wedbush Securities, A Comprehensive Review

Wedbush Securities is a well-established player in the financial industry, with a rich history dating back to 1977. The company was founded by Bruce W. Wedbush.

Wedbush Securities is a privately held firm, which allows it to maintain its independence and make decisions without external pressures. This independence is a key factor in its ability to provide unbiased research and advice to its clients.

The company has a strong reputation for its research capabilities, with a team of experienced analysts providing in-depth analysis on various industries and stocks. Wedbush Securities' research is widely respected and sought after by investors and institutions alike.

As a privately held firm, Wedbush Securities has the flexibility to adapt to changing market conditions and client needs. This agility allows it to stay ahead of the curve and provide innovative solutions to its clients.

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Wedbush Securities was founded in 1955 by Edward Wedbush and Robert Werner with a starting capital of $5,000 each.

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The company has grown significantly since its inception, evolving from a mutual fund brokerage into a full-service financial firm.

In 1969, Wedbush acquired Noble Cooke, a division of Gregory & Sons, which brought it into the specialist business on the Pacific Exchange.

Wedbush went on to acquire two specialist posts from Charles Schwab & Co., eventually becoming the largest specialist firm on the Pacific Exchange.

The firm joined the New York Stock Exchange in the early 1970s, expanding its correspondent and market making businesses aggressively during that decade.

Wedbush acquired the investment banking department of the former William R. Staats Company in 1976, giving it a start in the investment banking business.

In 2011, the company purchased Lime Brokerage, a New York-based firm, to expand its base and meet new direct market access regulations.

Edward Wedbush stepped down as co-founder in May 2018, with his sons Gary Wedbush and Richard Jablonski taking over as co-presidents.

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Wedbush Securities offers a range of services to help you manage your finances and achieve your financial goals. Their wealth management division is a full-service financial firm that provides guidance on various investments.

You can get financial planning, investment solutions, retirement planning, and lending and checking bank solutions through their advisors. They can also offer guidance on mutual funds, exchange-traded funds (ETFs), unit investment trusts (UITs), stocks, bonds, and alternative investments.

One of the unique features of Wedbush Securities is their wrap fee programs, which bundle most transaction and management costs into one fee. They offer four different wrap fee programs:

Their investment strategies and methods of analysis depend on the financial advisor, but generally include both long-term and short-term purchases of securities.

Wedbush Securities bases its investment advisory fees on a percentage of client assets under management (AUM).

The firm's wrap-fee programs follow a standard fee schedule, which is as follows:

For accounts with a lower minimum requirement, the Strategist Advisory Account Program has a lower fee schedule. The fees for this program are as follows:

The estimated investment management fees at Wedbush Securities can be substantial. For example, a $500,000 account would incur an estimated $14,500 in fees annually, while a $5,000,000 account would incur an estimated $97,000 in fees annually.

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Wedbush Securities has faced regulatory issues in the past, with a $1.5 million fine from FINRA in 2018 for violating the SEC's Customer Protection and Net Capital Rules. This fine was related to Wedbush being net capital deficient, ranging between $10.5 million and $59.4 million, between 2015 and 2016.

FINRA found that Wedbush failed to accurately calculate its customer reserve requirement on numerous occasions between 2011 and 2016, leading to underfunding of its reserve account. This failure exposed customer funds and securities to risk and prevented the firm from detecting the deficiencies for nearly seven years.

Wedbush settled this matter with FINRA with a no-admit/no-deny agreement, which is a common practice in regulatory settlements. In 2023, Wedbush paid a $350,000 fine related to a 2021 matter where a hacker allegedly approved four wire request transfers, totaling $6.6 million, without taking reasonable steps to confirm the requests' authenticity.

Wedbush agreed to pay $425,000 in a settlement agreement with FINRA in 2024, related to activities between 2009 and 2022. FINRA alleged that Wedbush published inaccurate and incomplete reports on various securities, or failed to publish reports in a timely manner.

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Wedbush Securities has been actively expanding its reach through strategic partnerships and investments. The company acquired Lime Brokerage in 2011, integrating its high-performance trading technologies with Wedbush's Advanced Clearing Services.

In 2018, Wedbush acquired Lightspeed, a US-based electronic trading platform, which merged with Lime Brokerage, LLC. This move further solidified Wedbush's presence in the trading industry.

Wedbush entered into a partnership with Maybank, Malaysia's largest bank by market capitalization and total assets, in 2023. This partnership allows Wedbush clients to trade in Southeast Asian markets and access Maybank's research and market insights.

In 2023, Wedbush became the largest shareholder of Velocity Trade, a Toronto-based global broker dealer.

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Wedbush Securities has faced significant legal and regulatory issues, with 130 disclosures in its latest SEC filing.

The largest fine was $2,447,043.38, imposed in 2014 for failing to provide adequate oversight of sponsored access trading platforms and not reporting suspicious trading activity.

Wedbush paid a $2,434,536 fine in 2019, on top of $5,674,713 in restitution and prejudgement interest, for adhering to improper practices involving pre-released American depository receipts.

As a broker-dealer, Wedbush receives shareholder distribution fees from mutual fund companies, which can create a conflict of interest.

Wedbush says it rebates these fees to clients who are being charged an advisory fee, so be sure to check if your account is being credited.

Some Wedbush financial advisors may also be insurance agents or broker representatives who receive commissions in their separate capacities.

Participating in a wrap fee program may not always be the best option, especially if your account has frequent transactions.

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