FINRA fined retail brokerage Webull Financial LLC $4.2 million after finding the firm’s compliance program failed to keep pace with its explosive customer growth. The settlement, announced November 5, covers anti-money laundering gaps, identity theft prevention failures and best execution violations spanning more than five years.
What happened in the Webull case
Webull, a FINRA member firm with CRD number 289063, accepted a censure and the $4.2 million fine in a Letter of Acceptance, Waiver and Consent dated November 4. The firm agreed to certify remediation of its anti-money laundering and identity theft prevention programs and to retain an independent consultant to overhaul its best execution reviews.
“Webull’s business grew rapidly, but its compliance program did not keep pace,” said Bill St. Louis, FINRA’s head of enforcement. “Firms must ensure that their supervisory systems grow with their business and address the risks they present.”
Identity verification failures at scale
Between January 2020 and September 2023, Webull opened millions of new accounts each year and reached at least seven million customer accounts by fall 2023. At least 6.5 million were approved through third-party identity verification vendors. FINRA found the firm approved more than 120,000 accounts without forming a reasonable belief that it knew the true identity of the customers behind them.
The examples in the AWC read like a checklist of what a working verification program should catch. The firm approved accounts for more than 50 customers who submitted photos of scenic landscapes instead of government-issued identification. It also approved accounts for customers whose own records in the firm’s systems indicated they were deceased.
Suspicious activity that went undetected
| Red flag missed | Scale |
|---|---|
| Unauthorized ACH transfers not identified or investigated | 473 transfers totaling over $1.5 million |
| Alerts for potentially manipulative trading in one account | Nearly 13,000 alerts across 100+ stock symbols over 18 months |
| Accounts opened by foreign nationals using two identical device IDs | ~80 accounts, each moving about $1,000 in and out the same day |
| Accounts approved from a single IP address with unverifiable employers | 91 accounts |
| Process to flag multiple accounts sharing one Social Security number | Not implemented until August 2021 |
FINRA said the firm lacked surveillance for suspicious out-of-the-money options trading, had no process for detecting unrelated customers trading from the same address or device, and failed to catch fraudulent account takeovers in a timely way.
Best execution failures stretched into 2025
The best execution findings reach from February 2020 to at least October 2025. Webull routed non-directed orders to market makers and exchanges that paid the firm for order flow, executing billions of equity shares along the way. Yet at times it conducted no review of the execution quality available at competing market centers, and before March 2021 it never reviewed execution quality for non-marketable orders, which made up 60 to 70 percent of its order flow.
The firm’s reviews also failed to break down results by order type or by individual security, two requirements of FINRA Rule 5310. The written procedures described the rule but never assigned responsibility for the reviews or documented how they would be performed.
Webull’s regulatory history
The $4.2 million penalty is the firm’s second seven-figure sanction in two years. In 2025, FINRA censured and fined Webull $1.6 million for failing to supervise social media promotions by influencers, including statements that were exaggerated or not fair and balanced.
What investors should do now
Webull customers can take practical steps regardless of the firm’s remediation schedule. Turn on two-factor authentication and confirm the phone number and email on file. Review monthly statements for transfers you did not authorize. Check the firm’s BrokerCheck record under CRD 289063 before adding new funds. Report any unrecognized account activity to the firm in writing and keep a copy.
Investors who believe they suffered losses related to this matter may wish to consult a qualified securities attorney to review their options.
This article is for informational purposes only and does not constitute legal or investment advice. Case details are drawn from public FINRA disciplinary documents, including AWC No. 2021073404901 dated November 4, 2026.
