By Nermeen Nabil Khear 
Robinhood is paying $29.75 million to settle FINRA’s investigations. The investigations were based on the company’s compliance with and supervision of the regulations.
FINRA’s recent report says the settlement amount includes a $26 million civil fine and 3.75 million restitution to customers. They stated that Robinhood did not “respond to red flags of potential misconduct.” This has resulted in violations of anti-money laundering and supervisory and disclosure laws.
Robinhood faced processing delays because of higher demand from March 2020 to January 2021. During this period, Robinhood restricted the trading of GameStop meme stocks and AMC Entertainment Holdings. FINRA says that Robinhood Financial wasn’t able to supervise its clearing system properly.
Moreover, the company didn’t pick out or take action against the manipulative, fraudulent trades and suspicious money transfers or the times when third-party hackers took over customers’ accounts.
FINRA added that the company had also opened “thousands of accounts” without verifying the customers’ identities as per the rules. There was no implementation of anti-money laundering programs on the trading platform.
Robinhood’s social media consisted of paid promotions by influencers. According to FINRA, the platform did not responsibly “supervise and retain” the communications in these posts. The regulator stated, “Some of these communications included statements that were promissory or not fair and balanced, and thus misleading to investors.”
Robinhood did not admit to FINRA’s accusations despite the settlement agreement
Robinhood Financial is paying $3.75 million as compensation to customers for secretly “collaring” market orders and converting them into limit orders.
Robin Financial and Robinhood Securities did not explicitly admit their wrongdoings despite agreeing to pay the penalties because of FINRA’s findings.
Two months ago, on January 13, two of the Robinhood entities paid a settlement of $45 million to the US securities regulator. The company was then accused of violating 10 securities law provisions. At that time, Robinhood Financial and Robinhood Securities “admitted to certain findings,” accusing them of not maintaining or preserving electronic communications from customers from 2020 to 2021.
Robinhood reported its highest net income record of $916 million. It reached a billion in revenue during 2024 Q4.
The company reached a revenue of $358 million in crypto trading. Its total transaction-based revenue was $672 million. This marks a 200% increase from the previous year. There was a rise of 450% in crypto trading volumes reaching $71 billion.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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