Robinhood fined $45 million by SEC

Two Robinhood brokerage firms have agreed to pay $45 million to settle charges from the US Securities and Exchange Commission (SEC).

As previously reported, the US Securities and Exchange Commission (SEC) accused Robinhood of violating a series of securities regulations. Now, the legal battle seems to have ended, with the SEC forcing the two Robinhood brokerage units to pay a total of $45 million in fines.

Accordingly, Robinhood Securities LLC and Robinhood Financial LLC were prosecuted for more than 10 crimes related to brokerage activities, including:

·      Failure to promptly report suspicious transactions;

·      Lack of effective identity protection measures;

·      Failure to prevent unauthorized access to Robinhood's computer systems.

·      In addition, the SEC also found that the two companies:

·      Failed to properly maintain and preserve electronic communications;

·      Failed to store copies of operational databases;

·      Failed to maintain certain customer communications as required by law during 2020-2021.

The SEC said Robinhood Securities failed to provide complete and accurate securities transaction information (also known as EBS blue sheet data) for more than five years.

According to the SEC order, during the EBS period, Robinhood Securities made at least 11,849 EBS data submissions that contained inaccurate or incomplete information due to 11 different types of errors. These failures resulted in the misreporting of data for at least 392 million transactions.

The SEC stressed that Robinhood’s persistent violations have seriously undermined its oversight of financial markets, and warned other brokerage firms about the importance of regulatory compliance. With the $45 million fine, Robinhood is once again under pressure to improve its operations and compliance, as well as maintain investor confidence.

Last September, Robinhood also paid a $3.9 million fine to settle a legal dispute with California authorities. The investigation concluded that Robinhood had not allowed customers to withdraw crypto from 2018 to 2022, forcing them to sell back to Robinhood to get off the platform. On the other hand, the financial services giant is rumored to be about to issue its own stablecoin and consider Bitcoin reserves.