What Led to the Fines?
Robinhood, the popular commission-free trading app, has been in hot water recently with regulators. In December 2020, the Financial Industry Regulatory Authority (FINRA) fined Robinhood $57 million for a variety of issues, including misleading customers about how it made money and not adequately disclosing certain fees. This was followed by a $65 million settlement with the Securities and Exchange Commission (SEC) in December 2021 for misleading customers about its revenue sources and not properly disclosing its payment for order flow practices.
The Latest Fine
In June 2021, FINRA announced that it had fined Robinhood an additional $57 million and ordered $12.6 million in restitution to customers for several compliance and supervisory failures. These failures included not having adequate systems and procedures in place to review customer accounts for potential fraudulent activity and not reporting customer complaints in a timely manner. Additionally, FINRA found that Robinhood had not properly responded to customer complaints and had a high number of unresolved complaints.
What Does This Mean for Robinhood?
The $29.75 million fine and restitution payment is just the latest in a string of regulatory actions against Robinhood. The company has faced criticism for its business practices, including the use of payment for order flow and the gamification of investing. With these fines, Robinhood is being held accountable for its actions and will need to make significant changes to its compliance and supervision practices to avoid further penalties.
Trending Hashtags and Crypto Tickers
#Robinhood #FINRA #SEC #compliancefailures #fines #restitution
$HOOD $FINRA $SEC
Sentiment Result: Negative
Comments
Post a Comment