Robinhood Settles With Multiple State Securities Regulators For $10 Million

Twitter icon  •  Published hace 11 meses  •  Hassan Maishera

Trading platform Robinhood has agreed on a $10.2 million settlement with regulatory agencies from seven states following its outages in March 2020.

TL;DR

  • Robinhood has settled with multiple state regulators for harming main street investors.

  • The company paid $10.2 million in damages after the platform’s outages in March 2020. 

Robinhood Pays $10.2 Million In Penalties

Stock and cryptocurrency trading platform Robinhood will pay $10.2 million in penalties for harming main street investors. This is according to the press release issued by the California Department of Financial Protection and Innovation (DFPI).

According to the DFPI, the company will pay the fine for harming investors after its platform’s outages in March 2020 sparked a probe by seven state securities regulators. 

The DFPI said the settlement stems from a North American Securities Administrators Association (NASAA) investigation spearheaded by state securities regulators from Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas regarding Robinhood’s operational failures with respect to the retail market.

While commenting on this latest development, North American Securities Administrators Association President Andrew Hartnett said;

“Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies.”

The company’s operation came under heavy scrutiny in March 2020 after its platform recorded numerous outages while thousands of traders and investors were placing trades on the app.

The state regulators claimed that the company had deficiencies n its review and approval process for options and margin accounts. Due to the platform’s outages, some users were unable to process trades, even as some stock prices plummeted due to the company’s poor customer service. 

DFPI Commissioner Clothilde Hewlett added that;

“Online trading platforms provide Americans with convenient options to invest. But platforms such as Robinhood must comply with common-sense protections for investors and consumers as required by law. Today’s agreement reflects the ongoing efforts by state securities regulators to protect investors and make sure that they are treated fairly by financial services firms.”

The DFPI pointed out that Robinhood didn’t deny or admit the allegations. However, the company fully cooperated with the investigation, with the DFPI adding that it didn’t encounter any evidence of willful or fraudulent conduct. 

 

Author

Hassan Maishera

Hassan is a Nigeria-based financial content creator that has invested in many different blockchain projects, including Bitcoin, Ether, Stellar Lumens, Cardano, VeChain and Solana. He currently works as a financial markets and cryptocurrency writer and has contributed to a large number of the leading FX, stock and cryptocurrency blogs in the world.