Investment Advisor Muhammad R. Wahdy Suspended by FINRA

• April 29, 2025
• Merrill Lynch

Muhammad R. Wahdy (CRD#: 6266210) is a registered investment advisor with Wahdy Capital in San Francisco, CA.

Broker’s History

He entered the securities industry in 2014 and previously worked with Merrill Lynch, Pierce, Fenner & Smith Incorporated; Wahdy Altahan; TD Ameritrade; Amerivest Investment Management; Wahdy Capital; Ameriprise Financial Services; Wells Fargo Clearing Services, LLC; and Casey Securities LLC.

Allegations of Misconduct

According to publicly available records released by the U.S Securities and Exchange Commission (SEC), in April 2025, without admitting or denying the findings, Wahdy consented to the sanctions and to the entry of findings that he engaged in an unapproved outside business by acting as an investment advisor without notice to or approval from his three member firms during that period. The findings stated that Wahdy acted as the owner, CEO, and CCO of an investment advisory firm. Wahdy provided investment advice to between 15 and 30 investors, none of whom were his brokerage customers. Wahdy’s responsibilities at the investment advisory firm also included paying rent and utility bills and hiring and managing employees, as well as communicating with his clients about their investment accounts and disseminating investor newsletters. Between 2019 and 2023, Wahdy received portfolio management fees and advisory fees from the investment advisory firm totaling approximately $148,000. Wahdy submitted annual compliance questionnaires and an annual attestation to his employing brokerage firms in which he inaccurately stated that he had no OBAs to disclose. In addition, Wahdy inaccurately certified to one firm that he had no OBAs. The findings also stated that Wahdy participated in a private securities transaction by soliciting $250,000 from one investor for limited partnership interests in a pooled investment fund without prior disclosure to, or approval from, his employing brokerage firm. Wahdy was the sole owner and operator of the limited partnership, and sole manager of the fund with responsibility for soliciting investors and making investment decisions. At the time of the pooled investment fund’s formation, Wahdy expected to receive compensation in the form of portfolio management fees. Wahdy submitted an annual compliance questionnaire to his employing brokerage firm in which he inaccurately stated that he had not been involved in a private securities transaction. The findings also included that Wahdy maintained and opened outside brokerage accounts that he did not disclose to his firms. Wahdy also failed to notify the executing firm at which he held the accounts of his association with his member firms. In addition, Wahdy submitted annual attestations, an annual compliance questionnaire, and a certification to his various employing brokerage firms in which he inaccurately stated that he had disclosed all outside brokerage accounts to them.

As a result, Respondent also consented to the imposition of the following sanctions:

• a 15-month suspension from associating with any FINRA member in all capacities; and
• a $10,000 fine.

For a copy of the Disciplinary Action Details, click here.

In addition, Muhammad Wahdy has also been the subject of one other disclosure:

• May 2023— Discharged by Merrill Lynch, Pierce, Fenner & Smith Incorporated, “Conduct involving failure to disclose an outside business activity.”

For a copy of Muhammad Wahdy’s SEC Advisor Info, click here.

We Help Investors Recover Investment Losses

Pursuant to FINRA Rule 3270, outside business activities in which Financial Advisors become involved must be disclosed.  FINRA Rule 3280 prohibits Financial Advisors from engaging in Private Securities Transactions, which are securities transactions that take place away from the employing brokerage firm.  The purpose of these rules is to ensure that Financial Advisors do not engage in selling away.  The Financial Industry Regulatory Authority (FINRA) strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.

The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.