In the world of free and low-commission brokers, Robinhood is the leader, but it faces increasing competition from a startup known as Webull, founded by one of the top executives at China-based e-commerce giant Alibaba.
And Webull's relationship with China, which is increasingly viewed as hostile by the United States, could pose a major obstacle to the company's ambitious expansion plans, The Post has learned.
As the Post reported, Congress has requested information about how U.S. securities regulators are overseeing Webull's storage of customer data.
Now, a group of red state attorneys general has launched an investigation into the company's ties to the mainland and its ruling Chinese Communist Party (CCP).
I've heard that speculation from China skeptics about the incoming Trump administration and who will be nominated for Secretary of State Marco Rubio, Secretary Matt Gaetz, and the Treasury Department is likely to intensify further. Webull's plans to list on the Nasdaq through a special acquisition vehicle (SPAC) are apparently delayed, with interest from various government agencies, people familiar with the matter said.
A spokesperson for Webull and an outside attorney at WilmerHale in Washington, D.C., did not respond to numerous emails and phone calls seeking comment.
The concerns reflect some of the problems U.S. regulators are having with the hugely popular Chinese-owned short video app TikTok. China's surveillance state essentially controls every company in the country, leading to concerns that the Chinese Communist Party is siphoning user data for espionage purposes.
Republicans and Democrats have been debating whether to ban TikTok for years, citing identity theft as the Chinese Communist Party collects “biometric identifiers” and search history of 170 million users in the United States. I am concerned about the possibility of
rough treatment
In 2021, Trump resigned from office before taking any substantive action on TikTok. (He settled for a forced sale to Oracle, a US company run by his friend Larry Ellison, which never materialized). Joe Biden actually signed the ban on TikTok, which is scheduled to go into effect in January, the day before he leaves office.
Now that Trump is back in D.C., at least rhetorically, he has reversed his initial hostility and is trying to win over the young voters who make up the core of his user base. TikTok is being pardoned because Trump sees it as the lesser of two evils in the social media space, which is partially dominated by Mark Zuckerberg's progressive Facebook, which suppresses MAGA content. There is a good chance that you will receive it. (Representatives for TikTok and the Trump transition team did not respond to requests for comment.)
Webull could face even harsher treatment from the new administration and the Republican-controlled House and Senate because of the type of information it may obtain from its customers. TikTok's alleged monitoring of biometric identifiers seems a little confusing. On the other hand, opening a brokerage account clearly means handing over sensitive personal information, such as your Social Security number, which could be used in more nefarious spying schemes.
And Webull has opened a large number of U.S.-based brokerage accounts. Research from various sources shows that Robinhood controls the largest share of the free and low-commission brokerage market, while Webull has a large presence in the country. Traders say the company offers fairly sophisticated investment tools, the analysis is sound, and the platform runs very seamlessly.
AG is investigating
Like TikTok, Webull denies misusing customer data, but U.S. officials are not convinced. In April, Indiana's Red State AG, led by Todd Rokita, sent a letter to the company's lawyers demanding precise ownership details. Rokita and his fellow prosecutors sent a second prosecutor on Oct. 9, claiming the company was obstructing the investigation.
“Webull’s June 2024 response reassures us that the company takes the data privacy of its U.S. customers seriously and that their personal data is not or could not be accessed by the Chinese Communist Party or China. It offers little reassurance. [People’s Republic of China]” said the letter, which was obtained by the Post.
“Indeed, important information is clearly omitted from Webull's response, raising many new questions and concerns. Protecting the sensitive personal and financial data of our U.S. customers is extremely important. “Webull's full cooperation with the investigation is essential to ensure that such data is not disclosed or accessed in an unauthorized manner by foreign parties.”
In the past, Webull itself seemed vague about China's involvement in the company. Anthony Denier, CEO of the company's U.S. division, told The Wall Street Journal in 2019 that Webull is “both a U.S. and a Chinese company.”
Rokita said in the letter that it is not sold in the United States.
“Webull appears to have an associated research and development facility (“R&D Facility”) located in Changsha, China, with several hundred employees. “SEC filings indicate that the research and development facility may provide services and support to Webull's U.S. securities operations,” the letter states.
He added that Webull's initial response to the AG's investigation identified “at least 13 people identified on FINRA's Broker Check website as current or former registered representatives of Webull who are believed to be Chinese nationals based in Changsha, China. There was no mention of this person,” he added.
The newspaper has learned that Mr Wable asked whether he would have until December 11 to obtain the information he needed to be satisfied with Mr Rokita's letter. A Rokita spokesperson said: “Even though they are not answering us, we continue to put pressure on them.”
