The Financial Industry Regulatory Authority (FINRA) recently imposed a $3 million penalty on Webull, the American branch of the Chinese-owned Webull Corporation, for allowing unauthorized traders to participate in options trading from December of 2019 up to July of 2021.
FINRA, a regulator monitored by the US Securities and Exchange Commission, determined that Webull did not conduct the necessary investigations before allowing options traders, nor did they have an adequate system in place to deal with customer grievances.
Furthermore, Webull neglected to submit certain customer complaints to FINRA as required. FINRA established that Webull’s program for assessing customer applications for options trading did not compare new applications to previously provided information, leading to the sanctioning of unaccustomed traders for options trading, including 9,000 traders who had no previous investment understanding that should have been rejected.
FINRA, annouced:
“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 uncovered that Webull’s method for realizing and addressing customer grievances was not suitably constructed, and the broker did not provide enough resources and personnel to tackle the backlog of customer messages and complaints it received.
