Robinhood, an online brokerage firm, has agreed to pay $45 million in penalties to settle a range of charges brought by the US Securities and Exchange Commission (SEC), including alleged violations of recordkeeping, among other issues. The penalty has been imposed on two Robinhood entities: Robinhood Securities will pay $33.5 million, while Robinhood Financial will pay $11.5 million.
An Array of Violations
According to the US regulator, Robinhood failed to investigate suspicious transactions, implement policies and procedures to prevent customers’ identity theft, address risks of cybersecurity threats, maintain and preserve electronic communications, maintain copies of core operational databases, and retain some of its communications with brokerage customers.
Furthermore, the Robinhood Securities entity allegedly committed two additional violations by failing to submit electronic blue sheets, which provide complete and accurate securities trading information, and failing to prevent market abuse when offering stock lending and fractional share trading programs.
“It is essential to the Commission’s broader efforts to protect investors and promote the integrity and fairness of our markets that broker-dealers satisfy their legal obligations when carrying out their various market functions,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement.
Following the settlement with the SEC, the two Robinhood entities agreed to conduct an internal audit concerning off-channel communications compliance. Robinhood Securities also agreed to certify its remediation of the deficiencies that caused the Reg SHO violations.
Robinhood’s Focus Is on Expansion
Founded in 2013, Robinhood transformed the American brokerage industry with its zero-commission model. Its impact prompted legacy giants like Vanguard, Charles Schwab, and Fidelity to adopt similar zero-fee trading options for retail investors.
The California-based brokerage had 11.8 million monthly active users and 1.98 million premium customers as of June 2024.
The brokerage is expanding its international presence and plans to open a regional headquarters in Singapore later this year. It entered the European Union in 2023 with crypto trading and introduced regular brokerage services in the UK last year.
Robinhood, an online brokerage firm, has agreed to pay $45 million in penalties to settle a range of charges brought by the US Securities and Exchange Commission (SEC), including alleged violations of recordkeeping, among other issues. The penalty has been imposed on two Robinhood entities: Robinhood Securities will pay $33.5 million, while Robinhood Financial will pay $11.5 million.
An Array of Violations
According to the US regulator, Robinhood failed to investigate suspicious transactions, implement policies and procedures to prevent customers’ identity theft, address risks of cybersecurity threats, maintain and preserve electronic communications, maintain copies of core operational databases, and retain some of its communications with brokerage customers.
Furthermore, the Robinhood Securities entity allegedly committed two additional violations by failing to submit electronic blue sheets, which provide complete and accurate securities trading information, and failing to prevent market abuse when offering stock lending and fractional share trading programs.
“It is essential to the Commission’s broader efforts to protect investors and promote the integrity and fairness of our markets that broker-dealers satisfy their legal obligations when carrying out their various market functions,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement.
Following the settlement with the SEC, the two Robinhood entities agreed to conduct an internal audit concerning off-channel communications compliance. Robinhood Securities also agreed to certify its remediation of the deficiencies that caused the Reg SHO violations.
Robinhood’s Focus Is on Expansion
Founded in 2013, Robinhood transformed the American brokerage industry with its zero-commission model. Its impact prompted legacy giants like Vanguard, Charles Schwab, and Fidelity to adopt similar zero-fee trading options for retail investors.
The California-based brokerage had 11.8 million monthly active users and 1.98 million premium customers as of June 2024.
The brokerage is expanding its international presence and plans to open a regional headquarters in Singapore later this year. It entered the European Union in 2023 with crypto trading and introduced regular brokerage services in the UK last year.
This post is originally published on FINANCEMAGNATES.
