FINRA orders Robinhood to pay $70 million financial penalty
The Financial Industry Regulatory Authority is cracking down on Robinhood and ordering it to pay money back to "harmed" customers.
Robinhood is one of the most popular means of trading stocks and cryptocurrencies, particularly in regards to “retail investors.” However, Robinhood came under heavy scrutiny earlier this year, when the infamous GameStop (GME) short squeeze happened. Users flocked to GameStop’s (GME) stock, trying to buy up as many shares as they could. Robinhood began to limit and outright restrict users’ ability to buy GME during this time, bringing up several ethical and business concerns. Now, Robinhood will have to pay a hefty price for its behavior, as FINRA is ordering the company to pay a $70 million financial penalty.
The Financial Industry Regulatory Authority revealed the financial penalties it was taking against Robinhood in a news release posted to its official website. The organization details Robinhood’s “systemic supervisory failures” and how they directly led to substantial harm to a number of its users. Most of this is in reference to the company’s handling of the GameStop (GME) short squeeze earlier this year.
Robinhood has been ordered to pay $12.6 million in restitution back to harmed users, as well as a $57 million fine. It’s a hefty price to pay for what was quite frankly a disastrous response to the wild stock market action that has taken place this year. For a look back at all of the trouble the company has found itself in, take a stroll down the Robinhood topic page on Shacknews.
-
Shacknews
replyDonovan Erskine posted a new article, FINRA orders Robinhood to pay $70 million financial penalty
-
"Most of this is in reference to the company’s handling of the GameStop (GME) short squeeze earlier this year."
Did we casually skim the same AWC? Seems to me that this ruling has nothing to do with meme stocks, though we could see something about that in a year or five.
"In determining the appropriate sanctions in this matter, FINRA considered, among other factors, that Robinhood, over a period of at least five years, failed to establish and maintain a supervisory system that was reasonably designed to achieve compliance with FINRA rules and applicable securities laws and regulations, and as a result, experienced systemic supervisory failures in several critical parts of its business. FINRA also considered that, during the same period, Robinhood failed to address numerous red flags that it was not in compliance with FINRA rules and applicable securities laws and regulations, and it failed to timely correct or address deficiencies even when the firm identified them. Finally, FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, thousands of customers who were approved to trade options even when it was not appropriate for them to do so, and millions of customers affected by the systems outages in March 2020."
https://www.finra.org/sites/default/files/2021-06/robinhood-financial-awc-063021.pdf
-
