Western International Securities

The U.S. Securities and Exchange Commission (SEC) has instituted administrative and cease-and-desist proceedings against Western International Securities, Inc. for violations related to Regulation Best Interest (Reg BI). The proceedings revealed that Christopher Kennedy, a broker with Western, employed an inappropriate day-trading strategy involving options contracts in the accounts of customers with moderate to conservative risk profiles, resulting in high commissions and significant losses. Western failed to enforce its policies to comply with Reg BI, allowing excessive trading in customer accounts. Western consented to the SEC’s findings without admitting or denying them and agreed to a cease-and-desist order, a censure, and a $140,000 civil penalty. The firm has already paid $9 million in remediation to affected customers and made improvements to its policies. The SEC acknowledged Western’s cooperation during the investigation, which included disclosing previously unknown information, conducting an internal investigation, and voluntarily providing key documents. The SEC’s order also requires Western to make its penalty payment within 10 days and prohibits the firm from offsetting its civil penalty against any potential damages in related investor actions. The SEC reserved the right to seek further penalties if it later discovers that Western knowingly provided false or misleading information during the investigation.