Digital Engagement Practices: Using the Webull Community

The Law

As a heavily regulated firm, Webull Securities must ensure it complies with section 912A(1)(a) of the Corporations Act 2001 (‘Corps Act’).

This section of the Corps Act prohibits conduct that is misleading or deceptive, or likely to mislead or deceive, in relation to financial products or services. Webull as an online trading provider must also ensure the financial services covered by our licence are provided efficiently, honestly, and fairly.

A key form of market abuse is Market Manipulation. This includes information which is deemed misleading or deceptive as it encompasses a range of activities aimed at artificially influencing the supply, demand or price of financial products and creates deceptive practices.

Retail investors like you who use online trading platforms can be exposed to a variety of digital engagement practices which influence the choice architecture within which their decisions are made.

These include practices such as:

· gamified incentives (e.g. prizes and giveaways)

· social trading (e.g. influencer marketing, education communities and copy trading), and

· the design of trading apps, websites, and marketing materials.

This particular article focuses on the use of Webull’s social trading platform - namely the Webull Community.

Key Market Manipulation Cases

We have seen key cases such as the American video game retailer Gamestop (NYSE: GME) whereby users of an online social news website named Reddit, colluded together to cause a short squeeze on the security which caused the retailer’s stock price to reach almost 30 times the value of the GME stock price. By this collusion and using certain untoward language such as enticing others to undertake this prohibited activity, these Reddit users essentially artificially amended the price of this security.

This activity was construed as market manipulation.

In this case, Reddit was a key Community Hub used by investors for discussion of stocks and sharing of information by users regarding their investments by offering the following social trading features:

· The ability to ‘watch’ and ‘follow’ other traders or financial influencers sharing their investing stories.

· Becoming a part of a trading ‘club’ or ‘community’.

Using the Webull Community

All users of our Community function must first read and attest to our Community Agreement when first accessing the Webull Community in the app:

This then becomes a legally binding arrangement between the user and Webull. Only after the Terms and Conditions have been accepted will the user be allowed to access and post on the Webull Community.

The below links are where you can locate our Terms.

https://a1uweb.wbausecurities.com/agreement/020ba8a62d084b34882b36f20a84d7ec.pdf

https://www.webull.com.au/agreements

Protecting Yourself from Market Manipulation

In Webull’s Community Agreement there are several items noted, however, one key requirement is: users of the Community function must always follow local rules and regulations.

Given that market manipulation is illegal, users must protect themselves from being caught up in this form of market abuse. When using our Community, it is imperative investors do not undertake the following:

· Deceptive practices that create a false or misleading appearance in the market

· Spreading false rumours about a company, its stock etc.

· Engaging in wash trades,

· Being involved in pump and dump schemes (including using language that could be construed as enticing others to do this too)

Monitoring the Webull Community

Our Community function is monitored daily for any language that is not permitted for use. This can include market abuse, bullying and harassment, sexual language, etc.

Should Webull identify a user using such language, we:

· Block the post so other users are not able to view it.

· Send the user a warning to not use such language, or they will be blocked completely from the Community.

· Monitor their trading closely to ensure no signs of market manipulation etc.

If market manipulation is identified regardless of if the individual intended to manipulate the market or not, penalties can apply.

Investors should also note that in Australia we have a 7-year statutory period. This means that any posts released about a stock are subject to investigation from Regulators up to 7 years after the original post. These Regulators may need to contact Webull for copies of all communications pertaining to that particular stock and if users of the Webull Community are identified as using untoward language, these regulatory bodies can take action against that individual and include them in their investigations.