FINRA Fines Webull $4.2 Million Over Identity Checks, AML and Best Execution

FINRA fined Webull Financial LLC $4.2 million on Wednesday-scale terms that will feel familiar to compliance desks: a single settlement covering anti-money laundering, identity theft prevention and best execution failures spanning more than five years.

The Financial Industry Regulatory Authority (FINRA), the self-regulatory body overseeing US broker-dealers, found that Webull approved more than 120,000 customer accounts between January 2020 and September 2023 without adequately verifying applicants' identities. The breakdown of what passed through onboarding reads like a stress test the firm failed. Some accounts were approved using photographs of scenic landscapes instead of government-issued identification. Others belonged to applicants listed as deceased in Webull's own systems.

"Webull's business grew rapidly, but its compliance program did not keep pace," said Bill St. Louis, FINRA's Executive Vice President and Head of Enforcement. That sentence, and the 120,000-account figure behind it, is the story.

What did the surveillance failures involve?

FINRA found that Webull failed to investigate 473 unauthorised Automated Clearing House (ACH) transfers worth more than $1.5 million. The transfers moved funds from customers at other financial institutions into Webull accounts — a pattern that AML programmes are specifically designed to flag.

One account alone generated nearly 13,000 alerts for potentially manipulative trading across more than 100 stock symbols over approximately 18 months. The alerts went unactioned.

Other surveillance gaps FINRA cited include:

• Inadequate monitoring of suspicious out-of-the-money options trading
• Failure to detect customers sharing the same address or device
• Missed fraudulent account takeovers
• Dozens of accounts opened for foreign nationals using the same IP address or device

Webull did not introduce checks for unrelated accounts sharing the same Social Security number until August 2021 — a delay that left more than a year of the review period without that basic deduplication control.

Finance Magnates contacted Webull for comment. The firm had not responded by the time of publication.

How did best execution reviews fall short?

The settlement also covers execution quality. FINRA found that between February 2020 and May 2025, Webull failed to conduct adequate reviews of customer execution quality.

The specifics matter for any desk benchmarking its own Order Execution Firm review obligations:

• Webull sometimes failed to assess execution quality at competing market centres
• It failed at certain points to review non-marketable orders, which accounted for 60% to 70% of its order flow during some periods
• Reviews lacked the required analysis by order type and individual security

The omission of non-marketable orders is the figure that should draw attention. A broker that leaves the majority of its order flow out of periodic best execution reviews is not measuring the outcome most of its customers receive. For a retail-facing firm routing significant volume, that gap converts a regulatory obligation into an unfunded liability.

What did Webull agree to?

Webull settled without admitting or denying FINRA's findings. The firm agreed to two forward commitments: certification of remediation of its AML and identity theft prevention deficiencies, and the appointment of an independent consultant to review its best execution programme.

The $4.2 million penalty follows a separate $1.6 million FINRA fine in 2025 over Webull's supervision and retention of influencer promotions, in which the regulator found some promotional statements were not fair and balanced or contained exaggerated and promissory claims.

Two enforcement actions in quick succession, both rooted in controls that lagged growth, point to a regulator working through the retail onboarding boom of 2020-2023 — and to further settlements with high-volume brokerage platforms whose compliance infrastructure was built for a smaller book.