Wedbush Securities Inc. will pay a penalty of $250,000 to settle its failure to supervise charge in a pending administrative proceeding, the SEC said in a news release.

An SEC investigation found that Wedbush Securities ignored warning signs that one of its registered representatives was involved in a long-running pump-and-dump scheme targeting retail investors. The company had probed the registered representative's conduct, but the regulator deemed the investigations as "flawed" and "insufficient." The company also failed to take appropriate action in connection with the representative's conduct.

The settlement with the SEC acknowledges the changes that Wedbush Securities made to reform its practices to detect and report misconduct.

"The firm takes very seriously its responsibility to supervise our financial advisers and we are appreciative of the SEC in helping us identify insufficiencies in our detection and reporting procedures and systems," co-Presidents Rich Jablonski and Gary Wedbush said in a news release. "We are confident these issues are fully rectified."