NOTICE OF DISCIPLINARY ACTION

MEMBER:

WEDBUSH SECURITIES, INC.

COMEX RULES: 432. General Offenses (In Part)

It shall be an offense:

L.3. to fail to produce any books or records requested by duly authorized Exchange staff, in the format and medium specified in the request, within 10 days after such request is made or such shorter period of time as determined by the Market Regulation Department in exigent circumstances.

561. Submission of Large Trader Positions and Volume Threshold Accounts (In Part)

561.A. Large Trader Reporting

Clearing members, omnibus accounts and foreign brokers shall electronically submit to the Exchange a daily large trader position report of all positions required to be reported as set forth in the Position Limit, Position Accountability and Reportable Level Table, in the Interpretations Section at the end of Chapter 5. Positions at or above the reportable level in a particular expiration month of a futures contract, or in all puts or in all calls of a particular option contract expiration month, are required to be reported. For an account with reportable positions in a particular contract, all positions, regardless of size, in any contract month and in any contract that aggregates with that contract must be reported.

811. Position Change Data

Position change data must be submitted to the Clearing House each trading day not later than the time specified by the Clearing House. Position change data will be in such form and contain such information as prescribed by the Clearing House. When requested, the identification of accounts will be made available to the Financial and Regulatory Surveillance Department.

854. Concurrent Long and Short Positions (In Part)

Set forth below are the procedures that must be followed for concurrent long and short positions and hold-open accounts.

C. Clearing members which, pursuant to this rule, carry concurrent long and short positions, must report to the Exchange both sides as open positions. When either side or both sides are reduced, the open positions as reported to the Exchange must be reduced accordingly, and, pursuant to Rule 806, may not subsequently be re-opened at the Exchange.

FINDINGS:

Pursuant to an offer of settlement, in which Wedbush Securities Inc. neither admitted or denied the Rule violations or factual findings upon which the penalty is based, on November 15, 2023, a Panel of the COMEX Business Conduct Committee (“Panel”) found that on February 24, 2022, Wedbush’s back-office accounting platform failed to maintain records of cleared trades after its settlement platform reached an upper limit of traded contracts due to extremely high trading volume. As a result, from that date through March 2022, Wedbush: (1) submitted inaccurate large trader position reports to the Exchange; (2) failed to submit position change data to the Clearing House in a timely manner; and (3) failed to accurately report concurrent long and short positions as open positions and/or accurately report reductions to these positions.

These inaccurate and untimely reports included positions in various contract months of Gold futures and options on futures (F&O), Copper futures, U.S. Midwest Domestic Hot-Rolled Coil Steel (CRU) Index futures, Micro Gold futures, Gold weekly options, Silver F&O, Micro Silver futures, and Silver weekly options.

The Panel also found that on multiple occasions from March 2022 to April 2022, Wedbush failed to respond to requests from duly authorized Exchange staff for information pertaining to position data in a timely manner.

The Panel found that as a result of the foregoing, Wedbush violated COMEX Rules 561, 811, 854.C., and 432.L.3.

PENALTY:

In accordance with the settlement offer, the Panel ordered Wedbush to pay a fine in the amount of $175,000 in connection with this case and companion cases CBOT 22-1591-BC, NYMEX 22-1591-BC and CME 22-1591-BC ($30,000 allocated to COMEX).