Webull Fined $500K for Lack of Compliance Team
At times, the firm had only one compliance employee for hundreds of thousands of accounts, state regulators said.
The online stock trading firm Webull was slapped with a $500,000 fine Thursday by Massachusetts regulators who said the firm had inadequate compliance staff — at times, only a single employee to handle compliance matters for hundreds of thousands of brokerage accounts.
While Webull paid out $30 million to sponsor the Brooklyn Nets of the National Basketball Association and the New York Liberty of the Women’s National Basketball Association, the brokerage didn’t hire a dedicated compliance team, according to charges filed by Masachusetts’ top securities regulator, William Galvin.
Those sponsorship deals helped Webull amass more than 6 million brokerage accounts, including more than 100,000 in the state of Massachusetts, since the company launched in 2018.
However, Webull didn’t have staff or supervisory procedures in place to field more than 40,000 communications received from customers in the state of Massachusetts over a four-year period, Galvin’s office alleged.
Webull agreed to settle the charges without admitting or denying any violation of the law. The firm declined to comment Thursday and has not addressed the settlement on its blog or social media.
Rather than a compliance department, Webull relied — “heavily and unreasonably,” according to Galvin — on third-party consultants and counsel. One Webull employee described the supervisory procedures drawn up by outside counsel as “inapplicable to the business.”
Galvin also found Webull’s employee training to be inadequate. Customer service personnel didn’t receive any formal training until June 2020. Annual written training instructed employees to “feel” whether a communication was a complaint, rather than provide objective criteria.
In addition to the fine, Webull has agreed to a comprehensive review of policies and procedures from an independent third-party and conduct an annual compliance review every year for the next three years.
The Webull sponsorship patch is still featured on the Nets’ and Liberty’s jerseys.
(Credit: EtiAmmos/Adobe Stock)