Source: United States Senator for Arkansas Tom Cotton
FOR IMMEDIATE RELEASE
Contact: James Arnold or Mary Collins Atkinson (202) 224-2353
September 23, 2021
Cotton Calls for Investigation of Chinese Stock Trading App
Washington, D.C. — Senator Tom Cotton (R-Arkansas) today wrote to Avril Haines, the Director of National Intelligence, to raise concerns about the national security risks posed by Webull, a Chinese stock trading app, and to call for an investigation into the company.
In part, Cotton wrote, “As a broker-dealer, Webull collects sensitive, personal information from its clients. That includes Social Security numbers, home addresses, bank accounts, and more. While Webull claims to store user data locally, Webull is still required to adhere to the laws of China.”
“Given these concerns, we believe that Webull is a potential counterintelligence threat and we ask that the Intelligence Community conduct an assessment of the potential national security risks posed by Webull and other China-based broker-dealers operating in the United States. Further, we request that the Intelligence Community brief Congress on these findings,” Cotton continued.
Text of the letter may be found here and below.
The Honorable Avril Haines
Director of National Intelligence
Office of the Director of National Intelligence
Washington, DC 20511
Dear Director Haines,
We write to express our concerns about potential national security risks posed by the growing use of Webull, a registered broker-dealer and securities trading platform, in the United States.
Webull is owned by Fumi Technology, a financial analysis firm that offers market trading tools for personal investors. Webull’s customer-facing unit and brokerage wings are located in New York City, however, their technology team is located in Hunan, China.
Webull does not earn commissions on trades but rather makes money via order flow payments, short selling fees, subscriptions, interest paid on margin, as well as investments of cash on balance. A 2018 profile of Webull described their Wall Street office as “a Chinese force in the ‘nerve center’ of the international financial community.” Webull had over eleven million users as of last year and is planning an initial public offering that could raise between $300-$400 million. From April to June of 2020, Webull’s trading volume exploded by 500% and trading accounts grew by 450,000.
As a broker-dealer, Webull collects sensitive, personal information from its clients. That includes Social Security numbers, home addresses, bank accounts, and more. While Webull claims to store user data locally, Webull is still required to adhere to the laws of China.
China’s deliberately vague patchwork of intelligence, national security, and cybersecurity laws compel companies to support and cooperate with the government’s intelligence work. With no independent judiciary to review government demands to provide user data or take other actions on the government’s behalf, there is no legal alternative for Chinese companies if they don’t want to comply. There is no independent press to make the situation public. And penalties for non-compliance can include destruction of the firm and long prison sentences.
Given these concerns, we believe that Webull is a potential counterintelligence threat and we ask that the Intelligence Community conduct an assessment of the potential national security risks posed by Webull and other China-based broker-dealers operating in the United States. Further, we request that the Intelligence Community brief Congress on these findings.
Thank you for your consideration regarding this important matter. We look forward to hearing from you.
Sincerely,
###