Lawmakers demand answers from SEC on CCP-linked financial services firms
WASHINGTON — Today, U.S. Senator Tommy Tuberville (R-AL) and U.S. Representative Jim Banks (R-IN-03) took action to ensure Americans’ financial data is protected from exposure to the Chinese Communist Party (CCP) through popular financial trading platforms.
In a letter to the heads of the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), Senator Tuberville and Representative Banks asked both agencies to ensure two Chinese-linked companies are complying with American laws and regulations. The companies, Webull Financial, LLC (Webull) and Moomoo, Inc. (Moomoo),are widely-used stock trading platforms operating within the United States.
“The biggest threat facing our country today is communist China,” said Senator Tuberville.“China doesn’t need a spy balloon to steal our information — they’ve got spies in the smartphones of millions of Americans, harvesting valuable information every second. The United States must protect the personal data of our citizens from falling into the hands of our greatest adversary.”
Because of the severity of the threat to American security, the lawmakers requested responses from the SEC and FINRA by May 31, 2023.
“As you are aware, Webull and Moomoo collect highly sensitive personal information from millions of their U.S. customers, including personally identifiable information (PII) such as Social Security numbers, mailing addresses, and financial account data,” wrote Senator Tuberville and Representative Banks.“We write today to once again call attention to the potential danger Webull and MooMoo pose to Americans’ financial and information security, as well as request answers from the SEC on its work to mitigate that threat.”
Senator Tuberville and Representative Banks also sent the letter to the Director of National Intelligence, Avril Haines, and Director of the Federal Bureau of Investigation, Christopher Wray.
The full text of the letter can be found here and pasted below.
May 3, 2023
The Honorable Gary Gensler Mr. Robert Cook
Chair President and CEO
U.S. Securities and Exchange Commission Financial Industry Regulatory Authority
100 F Street, NE 1735 K Street, NW
Washington, DC 20549 Washington, DC 20006
Dear Chair Gensler and Mr. Cook:
We write to convey our concerns regarding the continued operation of retail brokerage firms Webull Financial, LLC (Webull) and MooMoo, Inc. (MooMoo) in the United States. Webull and Moomoo are owned by Chinese companies with close ties to Chinese telecom giants Xiaomi and Tencent – both of which have reportedly aided the Chinese Communist Party in its efforts to surveil and suppress its citizens. As you are aware, Webull and Moomoo collect highly sensitive personal information from millions of their U.S. customers, including personally identifiable information (PII) such as Social Security numbers, mailing addresses, and financial account data. On July 29, 2022, Senators Tuberville, Cruz, Braun, Scott of Florida, and Marshall requested that the Securities and Exchange Commission (SEC) promptly investigate these firms to identify any activities or business practices that could put U.S. consumers at risk. We write today to once again call attention to the potential danger Webull and MooMoo pose to Americans’ financial and information security, as well as request answers from the SEC on its work to mitigate that threat.
While the scope of the SEC’s efforts to address the obvious risks these firms present to the American public and our capital markets remains unclear, it has recently come to our attention that Webull employs at least eight currently active Financial Industry Regulatory Authority (FINRA)-registered representatives who, according to FINRA’s BrokerCheck database, are located in the People’s Republic of China (PRC). As you know, FINRA-registered broker-dealers must comply with all SEC and FINRA rules, including requirements around recordkeeping and the supervision of registered representatives and associated persons. FINRA-registered broker-dealers must also comply with all SEC and FINRA examination and enforcement requests, including requests for documents and information.
In light of Beijing’s increasingly strict privacy laws barring many Chinese companies from sharing data with Western regulators, the presence of Webull registered representatives in the PRC raises serious concerns regarding (1) Webull’s ability to meet its supervisory obligations under SEC and FINRA rules; (2) the SEC’s and FINRA’s ability to oversee and examine Webull and its registered representatives and associated persons located in the PRC; (3) the adequacy of Webull’s compliance with all SEC and FINRA recordkeeping requirements; (4) the ability of the SEC and FINRA to adequately enforce federal securities laws, including the ability to obtain documents and information from Webull employees located in the PRC; and (5) the potential for U.S. customer PII to be shared or exfiltrated to Webull employees or affiliated entities located in the PRC.
Allowing Chinese-owned broker-dealers with registered representatives located in the PRC to operate in the U.S. on a level playing field with U.S. brokerage firms appears to be entirely inconsistent with the more than decade-long, bipartisan effort carried out by Congress, the SEC, and the Public Company Accounting Oversight Board (PCAOB) to obtain full access to the audit documents of U.S.-listed Chinese companies. As Chair Gensler recently explained, “if foreign issuers want access to our public capital markets, they must be on a level playing field with U.S. firms.” It is past time that we hold Chinese-owned broker-dealers to the same standards.
Please provide answers to the following requests no later than May 31:
- Describe all efforts the SEC and FINRA have undertaken regarding Webull’s past and present compliance with all applicable SEC and FINRA rules, specifically related to any of its locations or registered representatives or associated persons in China, including but not limited to rules related to recordkeeping, supervision, and document collection and production in response to SEC and FINRA examination and enforcement requests.
- Describe whether and how the SEC and FINRA review the cybersecurity, anti-money laundering (AML), and fraud/financial crimes programs and controls of registered broker-dealers such as Webull and MooMoo, particularly in light of heightened concerns about fraud and market manipulation emanating from the PRC.
- Describe whether and how the SEC and FINRA directly examine Webull’s locations and registered representatives or associated persons in the PRC. Please describe whether the SEC or FINRA have ever attempted to collect documents or information from a Webull location or registered representative or associated person in the PRC and the extent and nature of Webull’s compliance or noncompliance with such requests.
- FBI Director Chris Wray has stated that “China’s laws allow its government to compel any Chinese company to provide any information it requests – including American citizens’ data.” Given this dynamic, please describe what actions the SEC and FINRA have taken to ensure that U.S. customer PII collected or maintained by Webull has not been and will never be shared or exfiltrated to entities or individuals located in the PRC.
- Describe why you believe it is or is not appropriate for FINRA-registered broker-dealers to continue to employ registered representatives or associated persons located in the PRC given the associated national security, market integrity, and investor protection risks.
We appreciate your prompt attention to our concerns.
Tommy Tuberville Jim Banks
United States Senator Member of Congress
CC: The Honorable Avril D. Haines, Director of National Intelligence
The Honorable Christopher A. Wray, Director of the Federal Bureau of Investigation
Webull Financial, LLC (Webull) and Moomoo, Inc. (Moomoo) are two widely-used stock trading platforms operating in the United States that are registered with the SEC and FINRA. The parent companies of Webull and Moomoo are owned by Chinese entities with close ties to Chinese telecom giants Xiaomi and Tencent, which have reportedly aided the Chinese Communist Party in its efforts to surveil and suppress its citizens.
Despite their ties to China, the SEC and FINRA allow Webull and Moomoo to operate as registered broker-dealers in the United States and to freely collect and store personally identifiable information — including Social Security numbers, mailing addresses, and sensitive financial account data — for millions of U.S. citizens.
Senator Tuberville first called for an investigation into Webull and Moomoo in July 2022. In a letter to SEC Chairman Gary Gensler, Senator Tuberville and his colleagues Senators Ted Cruz (R-TX), Mike Braun (R-IN), Rick Scott (R-FL), and Roger Marshall (R-KS) explained concerns over these firms’ data sharing practices and ties to the CCP – both of which could put U.S. investors at risk.
Senator Tuberville believes the Communist Chinese Party seeks to overtake the United States as the top global superpower and that America must face China’s growing military and non-military threats with clear-eyed resolve.
In his first two years as a U.S. senator, Senator Tuberville has emerged as a leader in the fight against Chinese aggression. Senator Tuberville has led and supported numerous efforts to protect American resources, farmland, investments, intellectual property, and national security.
- In March, Senator Tuberville led a congressional delegation to Panama to discuss countering China’s growing influence in the region.
- On the trip, Senator Tuberville met with American and Panamanian officials to strategize ways to combat Chinese attempts to control the Panama Canal, which would give China enormous influence over global supply chains.
- To curb Chinese influence in the economy, Senator Tuberville introduced legislation to ban members of the Chinese Communist Party (CCP) from receiving B-1 and B-2 visas to the United States for vacation and non-official government business.
- The CCP is responsible for trillions of dollars of intellectual property theft each year. To curb growing foreign influence and crime and discourage other Chinese nationals from joining the CCP, the bill cosponsored by Senator Tuberville would bar all 93 million CCP members from entering the United States using nonimmigrant B-1 and B-2 visas.
- Senator Tuberville believes the retirement savings of our military and federal government employees, known as the Thrift Savings Plan (TSP), should not be invested in the economies of our adversaries, such as China.
- Senator Tuberville wrote about this issue in the Wall Street Journal in a column entitled, “I’ll Keep Veterans’ Pensions Safe From Communism” and discussed the issue on Fox Business.
- Senator Tuberville continued the push for accountability from the Federal Retirement Thrift Investment Board (FRTIB) surrounding the board’s policy on foreign investments.
- Senator Tuberville placed a hold on nominees to the FRTIB until the nominees provided clarification regarding foreign investment policies, which forced the nominees to commit to opposing TSP investment in China.
- Senator Tuberville led the call for an investigation into Webull Financial, LLC and Moomoo, Inc. — two Chinese-owned stock trading apps operating in the United States that are registered with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FIRA).
- Both apps are widely used by American investors and freely collect and store sensitive information about users, including Social Security numbers, mailing addresses, and sensitive financial account data.
- In May 2023, Senator Tuberville sent a letter to SEC Chair Gary Gensler and FINRA President and CEO Robert Cook calling for oversight of the trading platforms due to the potential CCP access of American user data. In the letter, Senator Tuberville asked for answers to critical questions about the ability of the SEC and FINRA to examine the Chinese companies’ compliance with American laws.
Senator Tommy Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans’ Affairs, and HELP Committees.