Robinhood faces nearly USD 70 million in FINRA penalties and restitution
The US Financial Industry Regulatory Authority (FINRA) fined Robinhood USD 57 million and ordered it to pay USD 12.6 million in restitution, plus interest, to thousands of affected customers.
FINRA cited misleading information provided to customers, system problems in March 2020 and inappropriate trading approvals affecting thousands of users.
Robinhood had attracted millions of customers and reached a multibillion-dollar valuation in just a few years, becoming a prominent fintech success story. Its rapid growth was accompanied by a series of regulatory problems.
In December 2020, the US Securities and Exchange Commission fined the company USD 65 million over practices that harmed investors. FINRA said that, despite its mission to make finance accessible, Robinhood had provided misleading information to customers. The article also noted the death by suicide of a customer in June 2020 in connection with issues on the platform.
The case raised concerns about inadequate due diligence when approving customers for trading.
The penalty was the largest imposed by FINRA at that time. Robinhood neither admitted nor denied the findings.
Source: Finextra.
Mongolian Fintech Association