Robinhood Securities LLC and Robinhood Financial LLC have agreed to pay $45 million USD in penalties to settle charges from the Securities and Exchange Commission (SEC), addressing a series of regulatory failures.
The SEC highlighted multiple violations by Robinhood, including:
Violations of Regulation SHO, related to short-selling practices, from May 2019 to December 2023.
Failing to accurately report trading activity and comply with short-sale regulations.
Delays in filing suspicious activity reports between January 2020 and March 2022, hindering the investigation of questionable transactions.
Inadequate cybersecurity measures, allowing a 2021 data breach where a hacker accessed sensitive user information.
Poor recordkeeping and communication retention, including missing brokerage records from 2020 to 2021.
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Settlement Details
The firm has admitted to the SEC’s findings and agreed to:
- Pay $33.5 million by Robinhood Securities and $11.5 million by Robinhood Financial.
- Implement internal audits and remediation plans to improve compliance and cybersecurity measures.
Previous Regulatory Issues
This settlement follows a $3.5 million fine imposed by the California Department of Justice on the Fintech for blocking customer access to crypto holdings and engaging in misleading practices.
Commitment to Improvement
As part of the settlement, the company emphasized its dedication to enhancing compliance efforts and safeguarding customer data.
The case highlights the critical importance of robust regulatory adherence and cybersecurity in financial services, especially for platforms serving millions of users globally.
