Multiple U.S. states will fine Robinhood $10,2 million for technical failures and investor harm

Seven state regulators, including those in California and Alabama, conducted an investigation into Robinhood platform disruptions in March 2020, leading to the settlement.

On Thursday, a California regulator said that Robinhood, a retail trading platform, will pay fines of up to $10.2 million for operational and technological failings that affected investors.

After a probe by the North American Securities Administrators Association (NASAA) into Robinhood platform breakdowns in March 2020, the California Department of Financial Protection and Innovation (DFPI) has joined the multi-state settlement. The DFPI also noted:

“Deficiencies at Robinhood in its review and approval process for options and margin accounts, weaknesses in the firm’s monitoring and reporting tools, and insufficient customer service and escalation protocols, which prevented some Robinhood customers from making trades as stock prices fell.”

California, Alabama, Colorado, Delaware, New Jersey, South Dakota, and Texas led the investigation on behalf of their respective securities agencies. Robinhood has been fined millions of dollars before.

After admitting to breaking rules, Robinhood’s cryptocurrency division stated in 2021 that it would pay $30 million to settle with the New York State Department of Financial Services (NYDFS).

Following a $65 million settlement with the U.S. Securities and Exchange Commission in 2020 over claims the platform deceived investors, the company has taken this action. The Financial Industry Regulatory Authority (FINRA) also levied a significant punishment on the site, totaling $70 million, for failing to ensure the safety of its users. NASAA President Andrew Hartnett stated in a news release:

“This settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies,”

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.