FINRA fines Webull $3 million for approving unqualified customers for options  trading

Webull, a security broker and US-based subsidiary of Chinese-owned Webull Corporation, has been fined $3 million by the Financial Industry Regulatory Authority (FINRA) for admitting unqualified options traders between December 2019 and July 2021.

FINRA, a membership-based regulator overseen by the US Securities and Exchange Commission, stated that Webull did not carry out sufficient due diligence before accepting options traders and did not maintain an appropriate supervisory system to handle customer complaints

Additionally, Webull failed to submit certain customer complaints to FINRA as required by the regulatory body. FINRA found that Webull’s automated system for reviewing customer applications for options trading did not check new applications against previously provided information, resulting in the sanctioning of unqualified customers for options trading, including 9,000 traders who had no prior investment experience and should have been disqualified.


FINRA stated:

For example, the firm approved more than 2,500 customers under the age of 21 to trade options spreads, even though the firm’s eligibility criteria required customers to have at least three years of options trading experience before being approved for that trading level.

FINRA also discovered that Webull’s system for identifying and responding to customer complaints was not appropriately designed, and the broker did not allocate sufficient resources and staff to handle the backlog of customer communications and complaints it received.

The regulator added:

The firm also did not report certain written customer complaints to FINRA, as required, including complaints that involved allegations of theft or misappropriation.

FINRA has recently fined a number of other brokerage firms, such as UBS Securities and others.

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