Crypto-friendly trading giant Robinhood pays up to $10,200,000 to US regulators over 2020 platform breach
Trading giant Robinhood will pay up to $10.2 million to several state regulatory agencies in a settlement over problems that led to the platform’s temporary shutdown in 2020.
In a new press release, the North American Securities Administrators Association (NASAA), an international organization that aims to protect investors from fraud, says that Robinhood will pay up to $10.2 million in fines for “operational and technical errors that harmed Main Street investors.”
NASAA, which launched an investigation into Robinhood after the March 2020 outages along with state securities regulators from Alabama, Colorado, California, Delaware, New Jersey, South Dakota and Texas, found that the trading platform had numerous deficiencies.
The order found the following violations at that time, according to the press release:
- “Negligent dissemination of inaccurate information to clients, including regarding margin and risk associated with multi-leg option spreads.
- Failure to have a reasonably designed customer identification program.
- Failure to monitor technology essential to providing customers with core broker-dealer services.
- Failure to have a reasonably designed system for handling customer enquiries.
- Failure to exercise due diligence prior to approving certain option accounts.
- Failure to report all customer complaints to FINRA [Financial Industry Regulatory Authority] and state securities regulators, as may be necessary.”
Although Robinhood will pay the penalty, the firm has neither admitted nor denied the findings.
Robinhood will also retain an independent compliance consultant and provide access to a FINRA-ordered compliance report to states of residence. In a year, the retail giant will certify to Alabama, the lead state, that it has followed the consultant’s recommendations or taken steps to effectively address the recommendations, according to the news release.
Recently, the crypto-friendly trading platform announced that it is launching a new crypto wallet on Apple’s mobile operating system with support for popular digital assets such as meme token Shiba Inu (SHIB), top altcoin Ethereum (ETH) and layer-2 scaling solution Polygon (MATIC).
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Featured image: Shutterstock/Anastelfy
