Robinhood Markets Inc. has agreed to pay $45 million in civil penalties to settle multiple allegations brought forward by the U.S. Securities and Exchange Commission (SEC), according to an announcement made by the regulator on January 13. The penalties, applied to its two subsidiaries, Robinhood Securities LLC and Robinhood Financial LLC, stem from a range of violations, including the failure to report suspicious activity in a timely manner and the improper handling of electronic communication records.
The SEC outlined the infractions in a cease-and-desist order, which noted that the Robinhood units had failed to meet significant regulatory obligations. “The two Robinhood firms neglected a wide array of critical regulatory requirements, including the failure to accurately report trading activity, comply with short sale rules, submit timely suspicious activity reports, maintain books and records, and protect customer information,” stated Sanjay Wadhwa, the SEC’s acting enforcement director.
While Robinhood did not admit to or deny the allegations, the company expressed its satisfaction with the resolution. “As the SEC’s order acknowledges, most of these are historical matters that our broker-dealers have already addressed,” said Lucas Moskowitz, Robinhood’s general counsel. “We look forward to collaborating with the SEC under its new administration.”
The settlement is the latest chapter in Robinhood’s regulatory troubles. The company, which went public in 2021, gained notoriety during the “meme stock” frenzy, which dramatically impacted the retail trading market. Since then, it has expanded its consumer offerings, including credit cards and retirement accounts.
However, Robinhood has faced ongoing scrutiny. In December 2020, before its initial public offering, the firm agreed to a $65 million settlement with the SEC, resolving claims that it failed to adequately disclose its practice of selling client stock orders to high-frequency traders and other firms.
Looking ahead, Robinhood also disclosed in May 2024 that it might face further enforcement action from the SEC related to its cryptocurrency business. The company confirmed that it received a Wells notice from the SEC, signaling the agency’s intent to pursue action over its crypto activities.
The $45 million settlement announced January 13 does not address any issues related to Robinhood’s cryptocurrency operations, with the company offering no updates on that matter.
Related topic:
Asset Managers Shift Focus to Bonds Amid Rising Equity Prices
Public Inquiry Opens on Controversial Gold Mine Proposal in Co Tyrone
