Robinhood Markets has agreed to pay $45 million to settle its circumstances 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 knowledge breach that uncovered prospects’ knowledge.
Two brokers of Robinhood Markets – Robinhood Securities and Robinhood Monetary – are the first models liable for accepting and executing trades. As such, the SEC ordered that each models would share in masking 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 common 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 rules. In response to 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 brief sale guidelines, and safety of shoppers’ knowledge and knowledge.
The SEC says that two Robinhood broker-dealers agreed to pay $45M in mixed penalties to settle prices that they violated over 10 securities regulation 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 not less than 11,000 Digital Blue Sheets or formal requests for data, together with a number of omissions or false data. Robinhood didn’t contest a few of the findings in the identical SEC doc.
Failure To Precisely Report Actions
In response to 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 prospects 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. In response to the SEC, the monetary companies firm failed to guard its prospects from December 2019 to Might 2022 and didn’t adequately handle 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 Effective
Each Robinhood models didn’t deny a few of the claims within the investigation and agreed to pay the positive. Robinhood Monetary can pay $11.5 million in fines, and Robinhood Securities should cowl its $33.5 million penalty, which have to be settled by January twenty seventh.
SEC’s announcement didn’t considerably influence Robinhood’s market efficiency. Final January thirteenth, the corporate’s share value 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 affords 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, resembling 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, notably for newbie and retail merchants.
Featured picture from Newsweek, chart from TradingView
