The Financial Industry Regulatory Authority (FINRA) has fined stockbroker Webull $3 million for onboarding unqualified options traders between December 2019 and July 2021. The membership-based regulator, which is supervised by the United States Securities and Exchange Commission, the property announced on Thursday.
In a statement, FINRA noted that Webull, which is the U.S. subsidiary of China’s Webull Corporation, failed to exercise “due diligence” before accepting options traders and failed to maintain a system “reasonably designed” monitoring system to record and respond to customer complaints. Additionally, the online brokerage, which launched in 2017, failed to forward certain written customer complaints to FINRA, as required by the regulator.
According to FINRA, Webull began offering options trading to its clients in December 2019. However, between that date and July 2021, the brokerage firm’s automated system to review client applications for options trading failed to verify new applications with previously provided information.
As a result of that failure, the brokerage regulator noted, Webull sanctioned unqualified clients for options trading. This included 9,000 traders who said they had no previous investing experience and should have been disqualified.
“For example, the firm allowed more than 2,500 clients under the age of 21 to trade options spreads, even though the firm’s eligibility criteria required clients to have at least three years of trading experience. in options trading before being approved for this level of trading,” FINRA added. explain.
FINRA Faults Webull Supervision System
Additionally, FINRA, in its investigations of Webull’s monitoring system, found that the broker’s mechanism for identifying and responding to customer complaints was not “reasonably designed”. The regulator also faulted Webull for not devoting enough staff and resources to deal with the backlog of customer communications, including complaints, it has received.
“The company also failed to report certain written customer complaints to FINRA as required, including complaints involving allegations of theft or misappropriation,” the regulator added.
Meanwhile, since the start of the year, FINRA has fined a number of other securities firms. These include SageTrader, UBS Securities, BGC Financial and Nomura Securities.
The Financial Industry Regulatory Authority (FINRA) has fined stockbroker Webull $3 million for onboarding unqualified options traders between December 2019 and July 2021. The membership-based regulator, which is supervised by the United States Securities and Exchange Commission, the property announced on Thursday.
In a statement, FINRA noted that Webull, which is the U.S. subsidiary of China’s Webull Corporation, failed to exercise “due diligence” before accepting options traders and failed to maintain a system “reasonably designed” monitoring system to record and respond to customer complaints. Additionally, the online brokerage, which launched in 2017, failed to forward certain written customer complaints to FINRA, as required by the regulator.
According to FINRA, Webull began offering options trading to its clients in December 2019. However, between that date and July 2021, the brokerage firm’s automated system to review client applications for options trading failed to verify new applications with previously provided information.
As a result of that failure, the brokerage regulator noted, Webull sanctioned unqualified clients for options trading. This included 9,000 traders who said they had no previous investing experience and should have been disqualified.
“For example, the firm allowed more than 2,500 clients under the age of 21 to trade options spreads, even though the firm’s eligibility criteria required clients to have at least three years of trading experience. in options trading before being approved for this level of trading,” FINRA added. explain.
FINRA Faults Webull Supervision System
Additionally, FINRA, in its investigations of Webull’s monitoring system, found that the broker’s mechanism for identifying and responding to customer complaints was not “reasonably designed”. The regulator also faulted Webull for not devoting enough staff and resources to deal with the backlog of customer communications, including complaints, it has received.
“The company also failed to report certain written customer complaints to FINRA as required, including complaints involving allegations of theft or misappropriation,” the regulator added.
Meanwhile, since the start of the year, FINRA has fined a number of other securities firms. These include SageTrader, UBS Securities, BGC Financial and Nomura Securities.