In the world of free and low-fee brokers, Robinhood leaderbut it faces increasingly stiff competition from a new startup known as Webull, founded by a top executive at China-based e-commerce giant Alibaba.

And this Webull’s ties with China This situation, which is increasingly seen as a rival to the United States, could pose a major obstacle to the company’s ambitious expansion plans, The Post has learned.

As The Post reports, Congress is demanding information about how U.S. securities regulators oversee the protection of Webull’s customer data.

Now a group of attorneys general from red states have launched an investigation into the company’s ties to the mainland and its ties to the ruling Chinese Communist Party (CCP).

The incoming Trump administration and China suspects he was nominated I’m told Marco Rubio as secretary of state, Matt Gaetz as AG, and whoever gets the nod at the Treasury will likely escalate tensions even further. The interest from various government agencies comes amid an apparent delay in Webull’s plans to list on Nasdaq through a special purpose acquisition company (SPAC), people familiar with the matter say.

A spokesman for Webull and the firm’s outside counsel at WilmerHale in D.C. did not respond to multiple emails and calls for comment.

The concerns reflect some of the issues U.S. regulators have had with the hugely popular Chinese-owned short-video app TikTok; There are concerns that the CCP is siphoning user data for espionage purposes, as the surveillance state here essentially controls every company on its territory.

Concerned about the potential for identity theft, the CCP’s collection of “biometric identifiers” and the search history of its 170 million U.S. users, both Republicans and Democrats have debated for years whether to ban TikTok.

rougher treatment

In 2021, Trump left office before he could do anything about TikTok. (A US company run by his friend Larry Ellison decided to make a forced sale to Oracle, which never materialized). Joe Biden actually signed a TikTok ban that would go into effect in January, the day before he leaves office.

Now that Trump has returned to D.C., at least rhetorically, he has abandoned his initial hostility by trying to win over young voters who form the core of his user base. TikTok could get a pardon from Trump, in part because he sees it as the lesser of two evils in the social media space dominated by Mark Zuckerberg’s Facebook, which restricts progressive and MAGA content. (A representative for TikTok and the Trump transition team did not return requests for comment.)

Webull could face tougher treatment from the new administration and the GOP-controlled House and Senate over the type of information it can get from customers. The claim that TikTok is spying on biometric identifiers seems a bit implausible. On the other hand, when you open a brokerage account, you are clearly surrendering sensitive personal information, such as Social Security numbers, that can be used for more nefarious espionage schemes.

And Webull is opening US-based brokerage accounts in droves. Research from various sources shows that Robinhood controls the largest share of the free, low-fee brokerage market, while Webull is making significant progress domestically. Investors say it offers very advanced investment tools, its analysis is solid, and the platform runs very smoothly.

AGs are investigating

Like TikTok, Webull has denied misuse of customer data, but US officials remain unconvinced. In April, red state AGs, led by Indiana’s Todd Rokita, sent a letter to the company’s lawyers demanding exact details of ownership. Rokita and his fellow prosecutors submitted a second report on October 9, alleging that the company had obstructed the investigation.

“Webull’s response in June 2024 does little to reassure us that the Company takes the privacy of its U.S. customers’ data seriously and that private data has not been or will not be accessed by the CCP or the PRC (People’s Republic of China).” The letter, obtained by The Post, stated:

“Indeed, Webull’s apparent omission of important information in its response raises a number of new questions and concerns. “Protecting sensitive personal and financial data of U.S. customers is critical, and Webull’s full cooperation with our investigation is vital to us to ensure that such data is not inappropriately disclosed to or accessed by foreign actors.”

In the past, Webull itself appeared to offer a murky description of China’s involvement in the company. Anthony Denier, CEO of the U.S. unit, told The Wall Street Journal in 2019 that Webull is “both a U.S. and a Chinese company.”

The letter states that Rokita is not sold in the US.

“Webull appears to have an affiliated research and development facility (‘R&D Facility’) in Changsha, China, staffed by hundreds of employees. SEC filings indicate that the R&D Facility may provide services or support to Webull’s U.S. brokerage operations,” the letter said.

He added that Webull’s initial responses to the AG’s investigation “failed to discuss at least 13 individuals identified on FINRA’s BrokerCheck website as current or former registered representatives of Webull who appeared to be Chinese nationals based in Changsha, China.”

The Post has learned that Webull asked if he could provide the information necessary to meet Rokita’s letter by Dec. 11. A spokesman for Rokita said: “Despite them giving us unanswered responses, we continue to press them.”