Webull Faces Scrutiny After Alleged Account Breach and Penny Stock Manipulation
From the desk of Jim Eccleston at Eccleston Law
An emerging investigation into Webull Financial centers on allegations that an unauthorized third party infiltrated the firm’s security systems, accessed customer brokerage accounts, liquidated existing holdings, and used the proceeds to purchase shares of Ten-League International Holdings Ltd. (TLIH). According to reporting, this trading activity inflated the price of the thinly traded penny stock before the unknown party allegedly exited their positions at a profit. Afterward, the stock price collapsed, leaving affected Webull customers with substantial losses. TLIH now trades at roughly forty-two cents per share.
The fallout for these investors may extend beyond market losses. Because their accounts were used to sell securities without authorization, they could also face significant tax liabilities tied to short-term and long-term capital gains.
According to news sources, Webull operates as a registered broker-dealer offering a digital platform that allows self-directed investors to trade at low cost and without commissions. The brokerage firm uses Apex Clearing Corp. for its trading activities. Following reports of the breach, Webull sent customers a form letter attributing the incident to a phishing scam. The firm has not acknowledged any negligence. Broker-dealers, however, have a duty to maintain systems that safeguard customer assets. When inadequate supervision or deficient security controls enable bad actors to enter investor accounts and misuse their funds, the firm may face liability for resulting losses.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, webull
