Not upheld: scam protection, market manipulation awareness, execution-only service obligations complaint against Webull Securities (UK) Ltd

Decision detail

Summary

Mr O complained that Webull Securities failed to protect him from a market manipulation scam orchestrated through a WhatsApp group where fraudsters posed as investment advisors. Mr O purchased shares in company 'O' based on their recommendations, but the stock price collapsed shortly after, triggering his stop-loss and crystallising significant losses. The ombudsman did not uphold the complaint, finding that Webull's execution-only service model meant it had no obligation to question Mr O's trades or proactively warn about manipulation occurring in private channels beyond the firm's visibility. While acknowledging the Consumer Duty, the ombudsman concluded that general scam warnings were sufficient for an execution-only platform where customers trade at their own discretion, and there was no automatic obligation to reimburse scam victims in these specific circumstances.

The Ombudsman's reasoning

The ombudsman found that Webull's execution-only service model meant it had no obligation to proactively monitor or question Mr O's trades. The scam occurred in private channels beyond Webull's visibility, so the firm could not reasonably have detected market manipulation. While Webull has obligations to address foreseeable harm under the Consumer Duty, this must be interpreted within the context of an execution-only trading platform where customers trade at their own discretion. General warnings about scams and investment risks were sufficient. The stop-loss was executed correctly, and there was no automatic obligation to reimburse scam victims in these specific circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website