Robinhood To Pay $29.75M to Settle FINRA Probe Over Compliance Issues
Robinhood has agreed to pay $29.75 million to resolve FINRA’s investigation into its oversight and compliance practices. The settlement includes a $26 million fine and $3.75 million in damages.
Robinhood is unable to manage trading systems during a surge in activity
FINRA found that despite obvious signs of processing due to the huge increase in trading activity, Robby Linshid did not properly manage or supervise its system for handling transactions.
This happened between March 2020 and January 2021, which is Robinhood’s restricted trading in popular meme stocks such as GameStop and AMC Entertainment Holdings. In other words, Robinhood isn’t doing enough to solve the problem that causes system delays, even though they could have seen it come.
Finra noted that Robinhood failed to “respond to red flags of potential misconduct”, resulting in anti-money laundering, oversight and disclosure violations.
Robinhood misses suspicious activity and fails to verify account
FINRA Established Such robbery failed to detect, investigating suspicious activity, such as manipulation of transactions, unusual currency transfers, or hackers taking over client accounts. Additionally, Robinhood has not properly checked the identity of the client and has opened thousands of accounts. Due to these issues, Robinshid failed to establish a strong anti-money laundering program.
Robinhood also failed to properly monitor and retain records of social media posts, including those from paid influencers. Some of these positions are misleading or unfair commitments to investors.
$3.75 million return It is because Robinhood provides customers with incorrect or incomplete information when changing market orders to limit orders, which affects their transactions.
Robini agrees with Finra’s discovery
Robinhood Financial and Robinhood Securities agree to the FINRA investigation results without acknowledging or denying the allegations. This is two months after the company settled $45 million with U.S. securities regulators in January after its investigation into violations of more than 10 securities laws. From 2020 to 2021, Robinhood Finance and Robinhood Securities failed to maintain and retain customer communications.
Recently, in the fourth quarter of 2024, Robinhood hit a record $916 million net income with revenue of more than $1 billion. Cryptocurrency revenue reached $358 million, a 200% increase, while cryptocurrency volume increased by 450% to $71 billion.
