Connect with us

Hi, what are you looking for?


Robinhood to pay $70 million for harming clients, supervisory failures, says U.S. regulator

Stock Markets40 minutes ago (Jun 30, 2021 12:31PM ET)

(C) Reuters. FILE PHOTO: The Robinhood App is displayed on a screen in this photo illustration January 29, 2021. REUTERS/Brendan McDermid/Illustration

By Chris Prentice and Pete Schroeder

WASHINGTON (Reuters) – Online broker Robinhood Financial LLC has been ordered to pay $70 million for ‘systemic supervisory failures’ and causing ‘significant harm’ to millions of customers with misleading or false information and outages, an industry regulator said on Wednesday.

The firm will pay $12.6 million in restitution to thousands of consumers as well as a $57 million fine, the largest financial penalty ever issued by the Financial Industry Regulatory Authority (FINRA), the regulator said.

The online startup, which has been credited with helping popularize trading among millennials, has been the subject of scrutiny from regulators over its practices. It has also been seen as helping to fuel the “meme stock” craze as some retail investors who talk up stocks on social media also utilize the Robinhood app.

The resolution on Wednesday deals with Robinhood issues dating as far back as September 2016, FINRA said. Its investigation found that Robinhood negligently communicated false and misleading information to customers at certain times, exposed them to excessively risky trading tools such as options, and failed users when its services suffered multiple outages.

In one instance, a Robinhood customer took his life after becoming confused by messages on the platform and seeing an inaccurate negative cash balance in his account, FINRA said.

Since early 2020, Robinhood has overhauled its supervisory and communications procedures. That has included conducting monthly account reviews, providing more customer support and hiring attorneys who have worked as government regulators, Robinhood said in a corrective action statement.

“We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all,” a company spokesperson said.

In a separate resolution in December, Robinhood agreed to pay $65 million to the Securities and Exchange Commission (SEC) to settle charges it misled customers about its revenue sources.

Robinhood to pay $70 million for harming clients, supervisory failures, says U.S. regulator

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like


Stock Markets25 minutes ago (Jul 16, 2021 05:46PM ET) (C) Reuters. FILE PHOTO: Johnson & Johnson’s Neutrogena Cool Dry Sport sunscreen, which is part...


Builders, creators and developers, this one’s for you! TechCrunch has always been about discovering fresh solutions and shining the light on exciting, new products...


(C) Reuters. FILE PHOTO: Indian billionaire Gautam Adani speaks during an interview with Reuters at his office in the western Indian city of Ahmedabad...

Disclaimer: it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Wise Gazette. All Rights Reserved