National investment fraud lawyers KlaymanToskes is investigating Webull Financial, LLC, following the firm’s censure and $3,000,000 fine from FINRA (“Financial Industry Regulatory Authority”) in connection with the firm’s alleged failure to exercise due diligence regarding options trading in customer accounts and to maintain a supervisory system.
Investors that suffered at least $100,000 in losses at Webull Financial and/or at the hands of the firm’s financial professionals are encouraged to contact attorney Lawrence L. Klayman, Esq. at (888) 997-9956 or firstname.lastname@example.org for a free consultation to discuss recovery options. We do not collect attorney’s fees unless we obtain a financial recovery for you.
Webull Financial, LLC, entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) with FINRA’s Department of Enforcement on February 27th, 2023, which disclosed that the Department censured and fined the firm $3,000,000. Webull Financial was censured for failure to exercise reasonable due diligence related to options trading in customer accounts and for failure to establish and maintain a supervisory system in compliance with securities laws and FINRA rules.
According to the AWC, Webull Financial’s automated system that the firm used to approve customers for options trading allegedly failed to consider information previously provided to the firm and only considered information that the customer provided in his/her most recent options suitability questionnaire.
The AWC describes an example where, despite the firm requiring “that customers seeking approval to trade options spreads (a privilege granted only to customers approved for ‘level 3’ options trading authority) have at least three years of options trading experience,” the firm approved “more than 2,500 customers under the age of 21 to trade options spreads” even though they did not have had at least three years of options trading experience before being approved.
The Department found that from December 2019, when the firm first began offering options trading, through at least July 2021, the firm’s supervisory system was not reasonably designed to achieve compliance with FINRA Rule 2360(b)(16) (Options). The AWC further alleges that errors in the programming of the automated system resulted in approvals for more than 9,000 accounts for level 1 options trading authority that did not satisfy the firm’s eligibility criteria.
In addition, the AWC alleges that from May 2018 to December 2021, Webull’s system for identifying and responding to customer complaints was “not reasonably designed to identify and respond to the volume of customer complaints received.” The findings state that in 2020, the firm reported “a total of only 69 written customer complaints despite receiving over 500,000 written customer communications that year.” In December 2020, the firm received more than 88,000 written customer communications, but only 15 were escalated for review as potential customer complaints.
Webull Financial, LLC consented to the entry of FINRA’s findings, without admitting or denying the charges. FINRA found the firm in violation of the following securities rules:
When brokers/advisors and brokerage firms fail to act in the best interest of their clients, they are violating securities laws. Investors that suffer investment losses as a result of their firm violating securities rules and regulations may hold their broker/advisor and brokerage firm responsible for their losses through FINRA arbitration.
Former and current customers of Webull Financial that suffered investment losses are encouraged to contact our firm immediately to discuss recovery options at 888-997-9956 or on the web at www.klaymantoskes.com. Every case is taken on a contingency basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.