Robinhood Markets has agreed to pay $45 million to settle its instances filed by the US Securities and Change Fee (SEC). In a doc shared by the company, Robinhood Markets violated guidelines on blue sheet submitting, id theft, and suspicious exercise reporting, together with a 2021 information breach that uncovered clients’ information.
Two brokers of Robinhood Markets – Robinhood Securities and Robinhood Monetary – are the first items answerable for accepting and executing trades. As such, the SEC ordered that each items would share in overlaying the penalties.
The $45 million settlement is the most recent within the collection of authorized charges paid by the corporate because it struggled with its quick development. Robinhood Markets was established in 2012 and have become fashionable for its zero-commission buying and selling, which attracted younger merchants and traders.
Robinhood Violated A number of Rules, Says SEC
In a January thirteenth assertion, the SEC shared that the company violated a number of guidelines and laws. Based on Sanjay Wadhwa, the company’s performing enforcement director, Robinhood Markets did not adjust to a number of regulatory necessities, together with correct reporting of buying and selling actions, compliance with quick sale guidelines, and safety of shoppers’ information and data.
The SEC says that two Robinhood broker-dealers agreed to pay $45M in mixed penalties to settle costs that they violated over 10 securities legislation provisions (@_danmangan / CNBC)https://t.co/dWl9YmL5Xmhttps://t.co/rabOpEr6Nfhttps://t.co/ZOzeer1FAj
— Techmeme (@Techmeme) January 13, 2025
Additionally, the company reported that Robinhood Markets made a minimum of 11,000 Digital Blue Sheets or formal requests for info, together with a number of omissions or false info. Robinhood didn’t contest among the findings in the identical SEC doc.
Failure To Precisely Report Actions
Based on the SEC, Robinhood additionally did not report suspicious buying and selling actions in a well timed method between January 2020 and March 2022. Along with failed reporting, the investigation additionally cited Robinhood for failing to implement id theft safety for its clients between April 2019 and July 2022.
Robinhood was additionally flagged for its non-compliance with the “Regulation SHO”, an SEC rule that goals to guard merchants and traders from abusive short-selling practices. Based on the SEC, the monetary companies firm failed to guard its clients from December 2019 to Could 2022 and didn’t adequately tackle the location’s vulnerabilities in 2021.
Picture: Reuters
Robinhood’s lapse in judgment has led to the hacking of its system, which compromised the info of hundreds of thousands of its customers.
Robinhood Agrees To Pay Tremendous
Each Robinhood items didn’t deny among the claims within the investigation and agreed to pay the wonderful. Robinhood Monetary pays $11.5 million in fines, and Robinhood Securities should cowl its $33.5 million penalty, which should be settled by January twenty seventh.
SEC’s announcement didn’t considerably impression Robinhood’s market efficiency. Final January thirteenth, the corporate’s share worth dropped to $39.59, a lower of 1.22%, earlier than reclaiming 0.48% on the finish of buying and selling hours.
Robinhood’s Crypto Connection
Robinhood Markets is related to crypto. The platform presents cryptocurrency buying and selling alongside conventional funding choices like shares, ETFs, and choices. Robinhood Crypto, a subsidiary of Robinhood Markets, permits customers to purchase, promote, and maintain varied cryptocurrencies, akin to Bitcoin, Ethereum, and Dogecoin.
Robinhood has been a well-liked alternative amongst retail traders attributable to its user-friendly interface and commission-free buying and selling mannequin. The corporate has additionally expanded its crypto companies, together with options like wallets that allow customers to switch crypto out and in of the platform. This makes Robinhood a big participant within the cryptocurrency ecosystem, significantly for newbie and retail merchants.
Featured picture from Newsweek, chart from TradingView
