Stock trading app provider Webull Financial has been fined $3 million by Finra for allegedly not properly vetting its customers, including more 2,500 people younger than 21 who were allowed to trade options spreads.
Finra, which announced the fine Thursday, found that the company did not conduct adequate due diligence on customers between December 2019 and July 2021, according to an announcement from the self-regulatory organization.
“During this period, the firm employed an automated system to review customer applications for options trading, but the system failed to compare new applications with information previously provided by the customer,” Finra’s announcement read. “This led to Webull’s approval of customers for options trading who did not satisfy the firm’s eligibility criteria, or whose accounts contained red flags that options trading was potentially inappropriate for them.”
The young app users could not have satisfied the three years of options trading experience the company required to allow them to trade options spreads, according to Finra.
The company also mistakenly approved about 9,000 people to trade options even though those customers indicated they had no investment experience. That was a result of “program errors in the firm’s automated systems,” Finra stated.
Additionally, the fines address faults in Webull’s supervisory system that did not allow it to monitor customer complaints between May 2018 and December 2021. The company didn't report some customer complaints to Finra, including ones that alleged thefts from their accounts or misappropriation, the regulator stated.
As part of the settlement, Webull acknowledged Finra’s findings but did not admit or deny the allegations. The company declined to comment to InvestmentNews.
Webull, which was founded in 2017, is a subsidiary of Fumi Technology, according to data from Crunchbase. Last year, Webull was in negotiations to be acquired by now disgraced cryptocurrency exchange FTX, although an agreement was not reached, reporting by Bloomberg found.
A $141M judgment and a federal asset freeze collide over one shrinking pool
The firm's CFO and EVP of Wealth Management Solutions are the latest executives to exit the broker-dealer.
Clients are saying they would consider switching advisors if another professional offered estate planning services, according to a new Trust & Will survey.
CEO Laurel Taylor says the fintech's composable AI stack helps workers optimize dollars across Trump Accounts, 529s, 401(k)s, and other employee benefits.
The bank has swiped three private banking veterans from BNY as the city climbs the ranks of America's fastest-growing wealth hubs.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
