A fine of 1.6 million dollars! FINRA took action against Webull Financial

FINRA imposes a $1.6 million fine on Webull Financial for social media and Form CRS violations. Webull Financial LLC has agreed to pay a $1.6 million fine to settle charges with the Financial Industry Regulatory Authority (FINRA). The firm was cited for failing to supervise and retain social media communications promoting the company and for not delivering Form CRS to certain customers on time. These actions violated multiple FINRA rules and federal regulations.

Description

Between January 2019 and December 2022, Webull Financial failed to reasonably supervise and retain social media communications that promoted the firm, posted by individuals with followings on social media (commonly known as “influencers”). Some of those communications included statements that were not fair and balanced, promissory, or exaggerated. Therefore, the firm violated FINRA Rules 2210, 2220, 3110, 4511, and 2010, Exchange Act § 17(a), and Exchange Act Rule 17a-4.

From June 2020 to December 2022, Webull Financial failed to timely deliver Form CRS to certain customers, make and preserve related records, and establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with its Form CRS obligations. Therefore, the firm violated Exchange Act § 17(a), Exchange Act Rules 17a-3, 17a-4, and 17a-14, and FINRA Rules 3110, 4511, and 2010.

As part of the settlement, Webull Financial is censured and fined $1.6 million for these and other violations.

(source: Webull)

About Webull Financial LLC

Webull Financial LLC became a FINRA member in January 2018 and began offering trading to customers in May 2018. The firm offers self-directed trading to retail investors through its mobile application and website. Headquartered in New York, New York, the firm has three branch offices and approximately 100 registered representatives.

Webull on WikiFX

According to WikiFX, Webull Financial LLC is a FINRA-registered broker-dealer that provides access to various opportunities across global financial markets with free commission, including stocks, ETFs, and options. The broker also provides six accounts and a proprietary trading platform.

Regulatory Status

According to the report, this case follows a similar enforcement action against M1 Finance LLC, which was fined $850,000 for similar violations related to influencer marketing. FINRA has emphasized the importance of firms maintaining supervisory systems that are reasonably designed to address the risks related to social media influencer programs.

Conclusion

The $1.6 million fine imposed on Webull Financial underscores the importance of compliance with FINRA rules and federal regulations, particularly concerning social media communications and Form CRS obligations. Firms must ensure they have adequate supervisory systems in place to prevent such violations and maintain the integrity of their operations.