Western International Securities: Regulatory Actions

The White Law Group reviews the regulatory history of Western International Securities.

Western International Securities (CRD#: 39262) is an independent broker-dealer based in Pasadena, CA. The firm reportedly has $3 billion in assets under management.  Western International currently has 18 disclosures on its CRD or FINRA BrokerCheck report, including 12 regulatory events and 5 arbitrations and 1 civil event. FINRA is the self-regulator who oversees brokers and brokerage firms. 

Regulatory actions taken against a broker-dealer may include censures, fines, suspensions and restitution, among others. They can have serious consequences for a broker-dealer’s profile and reputation. The following is a review of Western International Securities including customer complaints, broker misconduct and FINRA claims.

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Excessive and Unsuitable Trading

According to a letter of acceptance on July 30, 2024, Western International agreed to FINRA’s sanctions for alleged supervisory failures. From January 2016 to June 2020, Western failed to maintain a supervisory system, including written supervisory procedures, to comply with FINRA Rule 2111 concerning suitability requirements related to excessive trading.

This oversight led to potentially excessive and unsuitable trading in approximately 100 accounts. Between January 2016 and December 2019, trading in nine customer accounts by four representatives resulted in an average cost-to-equity ratio of 30%, an average turnover rate of 8, and over $2.5 million in trading costs for customers.

Western’s conduct violated FINRA Rules 3110 and 2010. The firm was censured, fined $475,000 and required to pay restitution of $1,057,632.70 plus interest.

Customer Complaints and Broker Misconduct 

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  There have been several cases of registered representatives employed by Western International Securities who were allegedly involved in broker misconduct and fraudulent activities. When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.

Dawn Bennett Sentenced to Prison for Ponzi Scheme  

 August 2019 – Most notably, former Western International advisor Dawn Bennett, was sentenced to 20 years in prison after she was convicted on 17 counts of securities fraud, wire fraud and bank fraud after a two-week trial in Maryland in August 2019. Financial Advisor Dawn Bennett gets 20 Years for $20 Million Ponzi Scheme 

Bennett allegedly used promissory notes to raise more than $20 million from at least 46 investors in her company, DJBennett.com, according to prosecutors. 

The White Law Group represented many of Dawn Bennett’s clients in claims against Western International Securities for its alleged failure to properly supervise her. Those claims generally alleged breach of fiduciary duty, negligent supervision, unsuitability in high-risk investments and failure to warn. 

Western International Broker Allegedly Stole from Investors

January 2023 – The SEC filed charges against former Western International Sec. rep Anthony “Tony” Liddle for allegedly stealing $1.9 million from clients in a fraudulent scheme. From June 2019 through May 2022, Liddle purportedly misappropriated the money from clients of Prosper Wealth Management, LLC (“PWM”), an investment adviser which he controlled. Liddle also allegedly made material misrepresentations about the use of client funds and the risk of client investments to at least 13 advisory clients, many of whom are senior citizens. FINRA barred Liddle in June 2022 after the allegations. Liddle has reportedly been sentenced to eight years in federal prison for wire fraud and money laundering.

The White Law Group recently filed a claim against Western International representing investors who allegedly suffered losses with Liddle.

December 2019 – Licensed insurance agents Clement Chichester and wife Brittney Jade Sias, formerly registered representatives with Western International Securities in WestLake Village, CA, allegedly sold annuities to a 91-year-old former public-school teacher to purportedly profit on large commissions, then allegedly convinced her to liquidate the policies so they could allegedly fund their own real estate investments. 

Following a guilty plea on July 6, 2019, Chichester was convicted on multiple felony counts and ordered to pay $750,000 restitution to his elderly victim. Under the terms of his conviction, Chichester’s felonies were reportedly reduced to misdemeanors after he repaid the victim $750,000, which he did on September 11, 2019. 

Unsuitable Trading and Misconduct

October 2019 – Dennis Mehringer Jr. former Western International advisor, was reportedly barred from working in the securities industry after an investigation concerning “unsuitable trading and other misconduct during the period from January 2017 through May 2018.” 

Mehringer allegedly made unsuitable recommendations of excessively expensive short-term trading of mutual fund Class A shares. He allegedly repeatedly recommended, and caused the customer to engage in, short-term purchases and sales of 84 mutual fund Class A positions in five of the customer’s accounts. Mehringer reportedly has 12 customer complaints on his broker report. Allegations include unsuitable investments, misrepresentation, fraud, and unauthorized trading, among others. 

FINRA Sanctions Western International Securities for REIT Sales

November 2022 – The Financial Industry Regulatory Authority sanctioned Western International Securities for alleged supervisory failures regarding non-traded REITs. From 2013 to 2017, Western International allegedly failed to establish, maintain, and enforce a supervisory system in connection with recommendations of non-traded real estate investment trusts (non-traded REITs). In addition, between 2015 and 2022, Western purportedly failed to report or timely report approximately 45 written customer complaints, customer arbitrations, and settlements. Western International agreed to a censured and fine of $400,000 plus restitution of $471,401.57 plus interest. Western International Allegedly Failed to Supervise REIT Sales 

In January 2021, Western International Securities entered into an Acceptance, Waiver, and Consent (AWC) agreement with FINRA. The firm consented to findings that, from October 2018 to December 2018, it executed opening transactions in stock options that resulted in a customer exceeding the position limit for four consecutive business days. Additionally, the firm failed to maintain a supervisory system with adequate written procedures to ensure compliance with option position limits. As a result, Western was censured and fined $20,000 for violating FINRA Rules 2360, 3110(a) and (b), and 2010.

Reg BI Violations and GWG Bonds

June 2022 – The Securities and Exchange Commission charged  Western International Securities and five of its brokers – Nancy Cole, Patrick Egan, Andy Gitipityapon, Steven Graham, and Thomas Swan – with violating Reg BI (Regulation Best Interest) when they recommended and sold bond offerings from GWG Holdings, an unrated, high-risk debt security to retirees and other retail investors.   

From July 2020 through April 2021, Western International reportedly sold an aggregate of $13.3 million in GWG L Bonds. As we have previously reported, GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection on April 20, 2022, after failing to make $13.6 million in interest payments to bondholders in January. The SEC alleged that Western International and the brokers recommended and sold L Bonds to retail customers, many of whom were on fixed incomes and had moderate risk tolerances, despite the issuer, GWG Holdings, Inc., stating the L bonds were “high risk, illiquid, and only suitable for customers with substantial financial resources.”  SEC Charges Western International re GWG L Bonds 

Western International Securities Supervisory Lapses

May 2020 – Western International Securities agreed to sanctions over its alleged failure to amend U4 reports on more than 10% of its approximately 475 brokers to disclose liens, judgments and/or bankruptcies against them totaling more than $5.6 million. The broker-dealer apparently failed to fix its supervisory system or file reports despite receiving about 100 letters and 800 emails from FINRA about 52 registered reps believed to have unreported events, according to FINRA. 

The firm agreed to a censure and fine of $325,000 for failing to properly supervise its reps and for violating Rule 2010 requiring FINRA members to operate with high standards of commercial honor and maintain just and equitable principles of trade. 

July 2019 – The Financial Industry Regulatory Authority (FINRA) reportedly censured and fined Western International Securities for overcharging customers on mutual fund transactions placed in customers’ accounts. FINRA’s findings state that forty customers were overcharged by an estimated total of $305,000.00. FINRA reportedly censured and fined the firm $75,000 and requested they provide remediation to Eligible Customers. 

February 2018 – FINRA issued an AWC in which Western International was censured, fined $125,000 and ordered to pay $521,098.10, plus interest, in restitution to customers. According to FINRA, the firm reportedly failed to establish, maintain and enforce a supervisory system and WSPs reasonably designed to ensure that registered representatives’ recommendations regarding leveraged, inverse and inverse-leveraged exchange-traded funds (non-traditional ETFs) complied with applicable securities laws and regulations, and FINRA rules. 

FINRA’s Supervision Rules 

All broker-dealers have a responsibility to adequately supervise their advisors. They must ensure they have procedures and systems in place to detect broker misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.   

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.   

The Financial Industry Regulatory Authority (FINRA) operates the largest dispute resolution forum in the securities industry.  In fact, FINRA Dispute Resolution is the forum for almost all disputes between investors, brokerage firms and individual brokers.  This is mainly because the vast majority of brokerage firms have mandatory arbitration clauses in their account agreements that require investors to file their disputes through FINRA.    

Class Action vs. Individual FINRA Arbitration Lawsuit 

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.

FINRA Attorneys 

The White Law Group represents investors in FINRA claims against their broker dealers. If you have suffered losses due to broker negligence or broker fraud, we may be able to help.

Our firm can evaluate the strength of your case, draft a well-structured statement of claim that accurately presents your allegations of fraud and desired damages, and provide representation during the arbitration hearing by presenting evidence and making compelling arguments on your behalf. 

Additionally, an attorney can engage in negotiation efforts for a potential settlement before the arbitration process begins. Opting for our securities attorneys will ensure that your rights are safeguarded throughout the arbitration process, maximizing your likelihood of achieving a favorable resolution.  

If you have suffered losses with Western International Securities, the securities attorneys at the White Law Group may be able to help you. For a free consultation, please call the offices at 888-637-5510.  

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.