Having issued southern California broker Timary Ann Delorme aka Timary Kennally Koller a cease-and-desist order and ordering $50,000 in civil penalties for her involvement in Izak Zirk Engelbrecht aka Zirk De Maison's penny stock market manipulation scheme, the Securities and Exchange Commission charged Delorme's employing firm, Wedbush Securities of Los Angeles, with failing to supervise its representative.
Calling Delorme an "accomplice" to the fraudulent scheme through her "abusive" conduct, investigators alleged that she recommended and bought particular stocks in her customers' accounts—in exchange for undisclosed compensation—and then engaged in manipulative trading in penny stocks, in the furtherance of a purported pump-and-dump scheme.
Delorme (CRD #736418)'s BrokerCheck report lists multiple customer disputes alleging fraud, deceit, misrepresentation, omission of material fact, negligence, unsuitability, unauthorized trading, breach of fiduciary duty, breach of contract, and violation of California securities law; total settlements have exceeded $300,000, while an additional fraud by misrepresentation and omission complaint filed in late 2017 remains pending.
The SEC alleges that Wedbush observed, but failed to act, on multiple red flags displayed by Delorme, noting that Delorme's manipulative penny stock activity was elevated to the president of Wedbush, in addition to legal and compliance personnel...yet, the firm failed to adequately respond to Delorme's suspicious and fraudulent behavior as FINRA opened an inquiry into the allegations against Delorme.
For example, the SEC pointed to one e-mail of Delorme's that specifically referred to inflating the value of a stock. Investigators say this should have resulted in compliance-related action, yet Wedbush's response was minimal.
The litigation release claims that Wedbush subsequently put Delorme on "heightened supervision," but only to resolve the aforementioned FINRA matter; the firm allegedly failed to adequately document its internal investigation, and also failed to address the matter when FBI agents interviewed Delorme about the penny stock scheme.
Delorme is still associated with Wedbush Securities' Los Angeles and Costa Mesa branches.
Last month, "recidivist" firm Wedbush agreed to pay $250,000 in disgorgement and $1 million in penalties to settle charges pertaining to several compliance and Exchange Act violations.
SEC officials have already pursued other brokers allegedly involved in the De Maison penny stock fraud scheme that resulted in $39 million in customer losses, while a federal judge in 2017 sentenced former Marquis Financial Services (Tarzana, CA) brokers Stephen Joel Wilshinsky and Gregory Evan Goldstein over their roles in the fraud.
If you have invested with Wedbush Securities of Los Angeles broker Timary Ann Delorme or with any representative or financial adviser who unsuitably recommended investment in risky penny stocks or other securities subject to price manipulation or other fraud that has proven harmful to your interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.