FINRA, a financial regulator, fined stockbroker Webull $3 million for failing to properly verify options traders and failing to establish a system to oversee and respond to client complaints.
According to information published on the FINRA website, Webull used an automated system to approve applications from options traders from December 2019 to July 2021, which could not properly determine the applicant's eligibility. This action contributed to many of the broker's clients under the age of 21 gaining access to options trading, despite the company's requirements establishing an eligibility criteria with a minimum of 3 years' experience in the options market. Despite clients' indications of a complete lack of investment experience, the system has approved over 9,000 option traders.
The regulator also noted that the broker's system, which was intended to register and respond to client complaints, did not function properly from May 2018 to December 2021. As a result, many Webull user complaints went unresolved, including allegations of theft or misappropriation of funds and assets.
