By: Bob Haegele
July 12, 2021Webull is fast becoming a staunch rival to popular stock trading platforms such as Robinhood, TD Ameritrade, and E*Trade. While these other platforms may have more distinguished and storied pedigrees, Webull has its distinct advantages, such as the ability to deal in cryptocurrency and an arguably more appealing mobile application.
Founded in 2017 by Chinese executive Wang Anquan, Webull is targeted towards young, hip investors who place precedence on a sleek, mobile-first trading experience. Because of its relative youth, questions about its legitimacy are bound to arise. Is Webull safe? Is it a legit broker? What’s it really mean that Webull is owned by Fumi Technology, a Chinese holding company?
The following article intends to shed some light on these very concerns, and assure potential users that Webull is indeed as legitimate as they come.
The digitalization of physical materials has slowly transformed our world, both for good and bad. Libraries big enough to span several buildings now fit conveniently in your pocket.
Personal medical records, once the stuff of complicated, labyrinth filing systems navigable only by trained experts, have gone completely virtual. And not least, money no longer refers to anything materially real – while still the medium of exchange, money has become bits and bytes we must believe in.
And the underside of faith is of course doubt; one simply cannot be had without the other.
That’s why it’s so important to find a broker that you can put your full trust in.
Webull, in short, is a registered broker dealer and a member of Securities Investor Protection Corporation (SIPC), New York Stock Exchange (NYSE), and Nasdaq. It is also a member of the SEC and FINRA. But what exactly does this all mean, and does it really make Webull a name you can count on?
We will take a closer look at each of these things in turn in order to identify just how Webull stacks up to its more established competitors.
Registered Broker Dealer – Defining the Legit
A broker, as defined by the U.S. Securities and Exchange Commission (SEC), is “any person engaged in the business of effecting transactions in securities for the account of others”. A “dealer”, on the other hand, is any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise”.
Though it should be noted that a “dealer” is not a trader like you or I, for we do not buy and sell securities as part of a regular business.
Becoming a registered broker dealer is no joke. Aside from completing a variety of stringent forms, a broker dealer may not begin to operate as a business until the SEC has granted them a registration, said business has become a member of an SRO (Self-Regulatory Organization) and SIPC (Securities Investor Protection Corporation), complies with applicable state requirements, and its “associated persons” have met all the applicable qualification requirements.
SIPC – Securities Investor Protection Corporation
Created by an act of Congress, the SIPC is essentially meant to protect the clients of brokers who fall into bankruptcy.
According to law, all registered (legit) brokers and dealers automatically become members of the SIPC. In addition, yearly assessment forms, SIPC-6 and SIPC-7, must be completed in order for a business to maintain their membership status.
For investors, Webull being part of the SIPC means that you are insured for up to $500,000 for cash and securities held.
SEC – Insurance Against Market Manipulation
The SEC is an independent agency of the U.S. Federal government that works to protect independent investors by maintaining markets that are without corruption. It also strives to facilitate capital formation, which in turn perpetuates a healthy and fair national marketplace.
Membership and registration rules for becoming a member of the SEC are demanding and many. Not only must a company file the correct information with Nasdaq, but register each and every staff person, complete a grueling interview process, and fulfill a number of electronic filings.
FINRA – Regulating Broker Dealers
The Financial Industry Regulatory Authority (FINRA) is in the business of regulating broker-dealers, capital acquisition brokers, and funding portals.
What is essentially an arm of the SEC, the FINRA ensures that those broker-dealers nationally registered are complying with the rules. They also write and enforce rules pertaining to the ethical activities of companies registered.
And the FINRA is highly effective, as the numbers attest to: the FINRA brought 808 disciplinary actions against registered brokers in 2020 alone. In addition, they ordered $25.2 million in restitution to personal investors who were harmed by shoddy or dishonest business practices.
The Bottom Line – Webull, A Name to Count On
Don’t let Webull’s relative youth fool you; being a registered broker dealer, a member of the SIPC, SEC, and FINRA ensures that this newcomer is a completely legit and serious competitor in the field of stock trading platforms.
What’s more, genuine user reviews about Webull are glowing with praise. With a 4.7/5 rating on the Apple App Store, and 4.5/5 on Google Play, Webull is not only secure, but impressing the most demanding of users.
A completely legitimate, more advanced alternative to Robinhood, Webull has you covered.
