US lawmakers flag China links of trading app

Washington: A bipartisan congressional investigation has raised national security concerns about the China-linked ownership, technology operations and data practices of online brokerage Webull, warning that American investors' financial information could be exposed to Chinese government surveillance.

The House Select Committee on China released its findings on Wednesday (local time), alleging that the Florida-headquartered trading platform had not been transparent about its connections to China.

The investigation was led by Republican Chairman John Moolenaar and Democratic Ranking Member Ro Khanna.

The committee said Webull's ownership structure, technical workforce, technology infrastructure, cross-border data arrangements and financing were closely connected to China.

It also alleged that the company's Chinese subsidiary had received government subsidies and financial incentives tied to political requirements.

“Webull’s China-based operations put American investors and their data at risk,” Moolenaar said.

He warned that Chinese national security laws could compel companies and individuals to cooperate with government demands for information.

“Using technology providers in mainland China and an opaque China-linked ownership structure, Webull exposes its data to our foremost adversary,” he said.

Webull rejected the findings, saying the congressional report contained significant inaccuracies and unsupported conclusions.

A company spokesperson said its US operations were conducted from its headquarters in St. Petersburg, Florida, and an office in New York City.

The company maintained that US customer data was stored in the United States and that access to sensitive information was controlled domestically.

The congressional report, titled Free Trades, Hidden Ties: Exposing Webull's China Links, identified six areas of concern.

These included alleged risks to investor data, misleading disclosures about employees and supervision, China-linked corporate control, weaknesses in regulatory compliance, Chinese government financial support and concerns involving clearing and custody arrangements.

The committee alleged that Webull had misrepresented the location of important employees and how their work was supervised.

According to the investigation, the company's mainland Chinese subsidiary, Hunan Weibu, employed 863 people, accounting for approximately 62 per cent of its global workforce.

The committee also questioned whether Webull's technology operations could be subject to Chinese laws requiring cooperation with state authorities.

Khanna said financial institutions holding Americans' savings and personal information should provide greater transparency about their operations.

“Whether it’s this trading app or other brokerage apps, custodians of Americans’ financial data and savings should strive for transparency with the customers they serve,” he said.

“Webull should be forthright about its connections to the PRC, rather than seemingly seeking to minimise them.”

The committee recommended five policy changes, including stronger oversight of foreign-controlled brokerages and new protections for Americans' financial data.

It called for legislation establishing inspection requirements for broker-dealers with overseas operations and expanding the jurisdiction of the Committee on Foreign Investment in the United States.

The lawmakers also proposed stronger safeguards for brokerage records and tighter regulation of clearing and custody arrangements where conflicts of interest could arise.

Webull shares fell sharply Wednesday following publication of the findings, reflecting investor concerns about possible regulatory consequences.

The report did not itself impose sanctions, trading restrictions or penalties on the company.

Webull operates an online investment platform offering access to stocks, exchange-traded funds, options and other financial products. It competes with established American brokerage firms in the retail investment market.

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