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Robinhood to Pay Finra-Record $70 Million Penalty for Lapses
Posted
June 30, 2021
Views
1,129
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June 30, 2021
1,129
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1.77%
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2:03
2:39Now PlayingRobinhood Financial LLC will pay a record $70 million penalty to settle allegations from the U.S.’s brokerage regulator that it misled millions of customers, had lapses tied to a March 2020 outage and that it let thousands of clients trade options that might not have been appropriate for them.
The case represents the largest financial sanction ever ordered by the Financial Industry Regulatory Authority, a decision that reflects the “scope and seriousness of the violations,” the watchdog said Wednesday in a statement. Finra said its investigation found that Robinhood had “negligently” provided false information to its customers in certain periods dating back to 2016.
The penalty comes at critical time for Robinhood, which plans to hold an initial public offering later this year. The brokerage firm has faced criticism from lawmakers and regulators over its ties to the meme-stock frenzy that has roiled markets this year and for claims that its popular app hooks neophyte investors on trading.
The Finra sanction includes a $57 million fine and a demand that Robinhood pay about $12.6 million to wronged customers. In settling the case, Robinhood neither admitted or denied the regulator’s allegations.
“Robinhood has invested heavily in improving platform stability, enhancing our educational resources, and building out our customer support and legal and compliance teams,” said Robinhood representative Jacqueline Ortiz Ramsay in a statement.
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