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Multistate Inquiry Targets Webull Financial for Potential Data Privacy Concerns Linked to Chinese Ownership

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In a major move, Indiana Attorney General Todd Rokita announced a multistate investigation into Webull Financial LLC, a Chinese-owned financial services company, over concerns regarding the potential exposure of American clients' personal data to the Chinese Communist Party (CCP). This inquiry highlights escalating tensions over data privacy issues that involve foreign ownership of American businesses, particularly those from China.

Webull Financial, known for its trading platform that allows U.S. customers to engage in stock, options, and cryptocurrency trading, is under scrutiny due to its Chinese ownership by Hunan Fumi Information Technology Co. and significant operations in the People's Republic of China (PRC). The firm has over 20 million registered users globally, and the investigation focuses on how it manages sensitive personal information from its U.S. clients, including Social Security numbers and financial details.

The collaborative effort involves attorney generals from fourteen states including Arkansas, Georgia, Idaho, Iowa, Kansas, Louisiana, Mississippi, Missouri, Montana, Nebraska, South Carolina, Texas, and Virginia. These states are leveraging their broad authority under state consumer protection and deceptive acts and practices laws to probe into Webull's practices.

Concerns Over Data Handling and Security

The investigation was sparked by allegations that Webull might not have adequately disclosed its data privacy and security measures. According to AG Rokita, Webull's privacy policy claims of stringent security measures are questionable given its deep ties with Hunan Fumi and indirect connections to other Chinese firms like Xiaomi, which have been accused of facilitating CCP's domestic surveillance activities.

Recent actions by financial regulators add to the concerns. The Financial Industry Regulatory Authority (FINRA) recently fined Webull $3 million for various compliance failures, including issues related to customer data handling. Moreover, several U.S. legislators have voiced worries about the potential for U.S. customer data being accessed by Webull’s Chinese personnel or shared with other entities in the PRC.

Broader Implications and Legislative Actions

This inquiry into Webull comes at a time of heightened legislative focus on the risks posed by foreign-controlled applications and platforms. The U.S. House of Representatives passed the Protecting Americans from Foreign Adversary Controlled Applications Act aimed at platforms like TikTok, which is owned by the Chinese company ByteDance. This act, currently under Senate review, underscores the broader national security and consumer protection concerns surrounding the management of American data by companies with foreign ties, especially to China.

As part of the investigation, AG Rokita has issued a series of detailed information requests to Webull, seeking transparency on its data handling practices, its organizational structure in China, and any potential access by Chinese government entities to U.S. customer information. The responses to these inquiries could significantly influence public and regulatory confidence in how multinational companies handle personal data in an increasingly interconnected global market.

The outcomes of this multistate investigation could lead to stringent regulatory actions and potentially reshape the framework of data privacy laws concerning foreign-owned businesses operating in the United States.

Disclaimer: The information provided here is for general informational purposes only and is not intended to be a comprehensive analysis of the subjects mentioned. All information, opinions, and forecasts contained herein reflect the author's personal views at the time of writing and are subject to change without notice. This information should not be construed as financial advice, investment advice, a recommendation, or an offer to buy or sell any securities or related financial instruments. Investors should conduct their own research or consult with a qualified financial advisor before making any investment decisions. The author and publisher of this content are not responsible for any losses, damages, or other consequences that may result from the use of the information provided. Investing in stocks, including those mentioned here, involves risks, including the risk of loss.

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