After an investigation by seven state securities regulators determined that Robinhood harmed investors, the company will pay penalties totaling $10,2 million.
After platform outages in March 2020 prompted an investigation by seven state securities regulators, Robinhood will pay $10,2 million in restitution for harming “main street investors.”
Andrew Hartnett, president of the North American Securities Administrators Association, stated in a press release: “This settlement makes it clear that Robinhood must take its customer service responsibilities seriously and correct these deficiencies.”
The organization did not respond promptly to a request for comment. Before March 2021, Robinhood’s options and margin account evaluation and approval process had “deficiencies,” according to regulators. Due to deficiencies in Robinhood’s customer service and escalation protocols, certain users were unable to execute transactions even as stock prices declined.
Robinhood is accused of “negligent dissemination of inaccurate information to customers” and neglecting to have a customer identification program with a reasonable design.
In addition, the FINRA and the states accuse Robinhood of not reporting all consumer complaints and failing to monitor technology that is essential to provide users with fundamental broker-dealer services.
In response to the claims made by the California Department of Financial Protection and Innovation, Robinhood has not issued an official denial or admission. The agency said there found no evidence of deliberate or fraudulent activity, and the corporation “fully cooperated” with the probe.
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