Robinhood Slapped With $70 Million Penalty

thebalancemoney.com:

Robinhood Financial, which runs a popular commission-free online trading application, has been hit with a record $70 million penalty for misleading customers, approving ineligible traders for risky strategies, and not supervising systems that failed and ended up locking millions of people out of trading.

The Financial Industry Regulatory Authority (FINRA) said Wednesday that it had fined Robinhood $57 million and ordered the company to pay approximately $12.6 million in restitution, plus interest, to thousands of harmed customers. FINRA said in a statement that the amount of the penalties “reflect the scope and seriousness of the violations,” and that it took into account the “widespread and significant harm suffered by customers.”

This isn’t the first time Robinhood has run afoul of regulators. In December, the broker agreed to pay $65 million to settle allegations from the U.S. Securities and Exchange Commission that the investment platform misled customers and provided overpriced trades.Meanwhile, Massachusetts regulators filed a complaint in December against the company for luring inexperienced investors to its app and not doing enough to protect them from outages and disruptions on its platform. In April, Massachusetts moved to revoke the company’s license in that state,and Robinhood responded by filing a preliminary injunction to prevent the case from going forward.

Robinhood, which started operating in 2013 and saw its users grow to 13 million by May 2020, has also ruffled the feathers of FINRA in the past. It was only about a year and a half ago that FINRA fined the company for best-execution violations, saying that it routed customers’ equity orders to four broker-dealers, all of which paid Robinhood for that