Former Wedbush Broker William Henry Sandeman Barred by FINRA After 81 Customers Lost More Than $3.5 Million in Volatility-Linked and Leveraged ETPs

• October 19, 2026
• Uncategorized

William Henry Sandeman (CRD# 831384) of Seattle, Washington was a registered representative with Wedbush Securities Inc. from December 2000 to January 2025. According to his FINRA BrokerCheck report, FINRA permanently barred Sandeman on October 5, 2026. FINRA found that he recommended that 81 retail customers buy and hold volatility-linked and non-traditional exchange-traded products (ETPs) as long-term investments. Fifty-nine of those customers were seniors, and they realized more than $3.5 million in losses.

Broker’s History

According to BrokerCheck and his SEC IAPD report, Sandeman entered the securities industry in 1977 and has about 48 years of experience. He is not currently registered. His broker-dealer registrations were:

• Wedbush Securities Inc. (CRD# 877), Seattle, WA (December 2000 to January 2025)
• PaineWebber Incorporated (CRD# 8174) (September 1993 to January 2001)
• Oppenheimer & Co., Inc. (CRD# 630) (May 1989 to October 1993)
• Drexel Burnham Lambert Incorporated (CRD# 7323) (February 1982 to May 1989)
• Foster & Marshall Inc. (CRD# 321) (January 1977 to July 1982)

He passed the Series 7, 9, 10, 15, 63, 65, and 99 examinations, the SIE, and the AMEX put and call examination. The Series 9 and 10 are sales supervisor qualifications. BrokerCheck reports five disclosure events: the FINRA bar and four customer disputes, three of which settled.

FINRA Bar (October 2026)

Sandeman entered into a Letter of Acceptance, Waiver, and Consent (AWC No. 2022073920901), and FINRA barred him from associating with any member firm in all capacities, effective October 5, 2026. He consented to the sanction and the findings without admitting or denying them. According to BrokerCheck:

• Sandeman willfully violated Regulation Best Interest (Exchange Act Rule 15l-1(a)(1)) by recommending that 81 retail customers buy and hold volatility-linked and non-traditional ETPs as long-term investments.
• He made those recommendations without a reasonable understanding of the products’ risks and without a reasonable basis to believe they were in his customers’ best interest.
• He did not research the products and did not review their prospectuses, which disclosed the risks of holding them long term.
• He did not consider his customers’ investment objectives or risk tolerance. Most of the customers had conservative or moderate risk tolerances, and 59 were senior investors.
• Customers held the products for periods as long as nearly four years, and the vast majority held them for more than a year.
• As of January 2025, the customers had more than $3.5 million in realized losses on these products.

Published reports describe the conduct as occurring between 2020 and January 2025, and say FINRA did not sanction Wedbush in this matter.

Customer Disputes

Received	Firm	Allegation	Damages Alleged	Outcome
Oct. 2024	Wedbush	Losses in leveraged ETF and ETN holdings	$350,000.00	Settled Nov. 2024 for $30,000; Sandeman contributed $0
Jan. 2014	Wedbush	Overconcentration in a single sector through individual stocks, real estate securities, and MLPs (FINRA arbitration)	$161,054.41	Settled Sept. 2014 for $50,000; Sandeman contributed $5,000
Oct. 2008	Wedbush	Unauthorized purchases of stocks in June 2008	$16,806.59	Denied
Aug. 2006	UBS (PaineWebber)	Failure to follow trust guidelines; excessive unauthorized trading in tech stocks, 1999 to 2004	$25,000.00	Settled Dec. 2006 for $9,500; Sandeman contributed $0

The October 2024 complaint involved the same type of product at issue in the FINRA bar. Sandeman denied the allegations in the 2014 arbitration and stated that he contributed to the settlement at the firm’s urging. On the 2006 complaint, he stated that the trust account was not discretionary and that he left the firm in December 2000. Settlements are not admissions of wrongdoing.

Volatility-Linked and Leveraged ETPs and the Applicable FINRA Rules and Legal Standards

Volatility-linked and non-traditional ETPs are built for short-term trading, not long-term holding. Recommending them as buy-and-hold investments to conservative and senior customers implicates several rules and standards.

How these products lose value over time. Volatility-linked ETPs track futures on the CBOE Volatility Index (VIX), not the index itself. As the futures roll from month to month, the products typically lose value. In Regulatory Notice 17-32, FINRA warned that many volatility-linked ETPs are highly likely to lose value over time and may be unsuitable for retail investors who plan to buy and hold them. Leveraged and inverse ETFs and ETNs reset daily. In Regulatory Notice 09-31, FINRA explained that their performance over periods longer than one day can differ significantly from the performance of the underlying index, and that they are typically unsuitable for retail investors who plan to hold them for more than one trading session.

Regulation Best Interest. Since June 30, 2020, Regulation Best Interest has required broker-dealers and their representatives to act in a retail customer’s best interest when making a recommendation. Its care obligation requires reasonable diligence to understand a product’s risks, rewards, and costs. It also requires a reasonable basis to believe the recommendation is in the particular customer’s best interest, based on the customer’s investment profile. A representative who does not read the prospectus or consider the customer’s objectives and risk tolerance cannot meet that standard. Disclosure of the risks in a prospectus does not cure a recommendation that lacked a reasonable basis.

Suitability (FINRA Rule 2111). For recommendations before June 30, 2020, FINRA Rule 2111 imposed similar reasonable-basis and customer-specific obligations. The older complaints on Sandeman’s record, including the 2014 overconcentration claim, would be measured against that standard.

Just and equitable principles of trade (FINRA Rule 2010). A violation of Regulation Best Interest is also a violation of Rule 2010, which requires associated persons to observe high standards of commercial honor.

The brokerage firm’s supervisory obligations (FINRA Rule 3110). Rule 3110 requires member firms to reasonably supervise their representatives. Regulatory Notices 09-31 and 17-32 both reminded firms to supervise recommendations of these products, including how long customers hold them. Repeated purchases by dozens of conservative and senior customers, held for months or years, are the type of pattern a supervisory system is expected to detect. FINRA’s action against Sandeman makes no findings against Wedbush. Investors may still pursue the firm for failure to supervise.

What This Means for Investors

A FINRA bar does not return money to customers. Investors who held volatility-linked, leveraged, or inverse exchange-traded products on Sandeman’s recommendation may have claims for unsuitable investments, violations of Regulation Best Interest, and failure to supervise. Because Sandeman is no longer in the industry, claims would typically be brought against Wedbush Securities in FINRA arbitration. Account statements showing purchase dates, holding periods, and realized losses are the starting point for any claim. FINRA Rule 12206 generally makes claims ineligible for arbitration six years after the event giving rise to them.

The Wolper Law Firm, P.A. represents investors throughout the country in securities arbitration and litigation, typically on a contingency fee basis. Matt Wolper, the firm’s managing principal, is a trial attorney who has handled more than 1,000 securities cases. If you invested in volatility-linked or leveraged ETPs through William Sandeman at Wedbush Securities, contact us for a free consultation at 800.931.8452 or mwolper@wolperlawfirm.com.