Wedbush ordered to pay $3.5M by FINRA for ‘morally reprehensible failure' to Pay Muni Trader Owed Years of Incentive Compensation

In a July, 2011, article by Liz Skinner for InvestmentNews.com, she writes that Wedbush Securities Inc. was ordered to pay a former municipal sales trader Stephen Kelleher $3.5 million for failing to give him years worth of incentive-based compensation he was owed.

A three-person Financial Industry Regulatory Authority Inc. (FINRA) panel found the firm's “morally reprehensible failure and refusal to compensate” Mr. Kelleher in a timely fashion broke California's labor laws. A “poorly written and ambiguous employment contract” was partly to blame, the Finra panel said.

According to the InvestmentNews.com article, Mr. Kelleher, who joined Wedbush in 2007, had requested $4.2 million in bonus compensation he was due, but is satisfied with the arbitration award. Mr. Kelleher resigned days after the arbitration case finished up and he is not working right now. Wedbush plans to appeal the ruling.

Wedbush had been paying Mr. Kelleher's salary, but not the incentive comp that he was due writes Ms. Skinner. The arbitration panel also blamed “a corporate management structure” that required Edward W. Wedbush, the majority shareholder in the firm, to approve bonus pay to senior employees. That approval “was routinely withheld,” the Finra panel wrote. Another Wedbush employee testified that he also went for two years without receiving the incentive-based compensation due him.

Skinner goes on to say that Mr. Wedbush was originally named in the suit. Mr. Kelleher dropped the case against him during the hearing, however, after Mr. Wedbush requested to testify in person, which would have delayed the hearing.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. Call a Securities Arbitration Lawyer for a free consultation.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.