The Financial Industry Regulatory Authority (FINRA) ordered Robinhood to pay approximately $70 Million for systemic supervisory failures and significant harm suffered by millions of customers.
The Financial Industry Regulatory Authority (FINRA) announced Wednesday that it has fined Robinhood Financial LLC $57 million and ordered the firm to pay approximately $12.6 million in restitution, plus interest, to thousands of harmed customers.
“The sanctions represent the largest financial penalty ever ordered by FINRA and reflect the scope and seriousness of the violations,” FINRA said in a statement.
“In determining the appropriate sanctions, FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so,” FINRA wrote.
“Compliance with these rules is not optional and cannot be sacrificed for the sake of innovation or a willingness to ‘break things’ and fix them later,” said Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement. “The fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its customers.”
Robinhood experienced several outages last year, starting in March, particularly on days of high trading volumes. (To be clear, the settlement is not related to the so-called meme-stock frenzy of early 2021 when, at one point, Robinhood temporarily restricted customers from buying shares of several companies, including GameStop.)
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