tl;dr
The Securities and Exchange Commission (SEC) has announced that Robinhood Securities LLC and Robinhood Financial LLC will pay a combined $45 million in civil penalties to settle various charges related to their brokerage operations. The charges stem from regulatory failures, including violations of ...
The Securities and Exchange Commission (SEC) has announced that Robinhood Securities LLC and Robinhood Financial LLC will pay a combined $45 million in civil penalties to settle various charges related to their brokerage operations. The charges stem from regulatory failures, including violations of reporting and recordkeeping requirements, cybersecurity failures, and other compliance issues.
According to the SEC, Robinhood's violations spanned several areas. Between January 2020 and March 2022, the firm failed to file timely suspicious activity reports, resulting in delays in investigating suspicious transactions. Additionally, from April 2019 to July 2022, Robinhood did not implement adequate policies to protect customers from identity theft.
The SEC also found that a cybersecurity vulnerability exposed user data between June and November 2021, when a third-party hacker gained unauthorized access to information related to millions of users. Furthermore, Robinhood violated rules regarding maintaining electronic communications and safeguarding operational data, including failing to retain key communications with customers between 2020 and 2021.
Robinhood was also cited for failing to provide accurate securities trading information for over five years, as required for the SEC's oversight of market activities. Additionally, Robinhood Securities violated Regulation SHO, which addresses short-selling practices between May 2019 and December 2023.
Both Robinhood Financial and Robinhood Securities have admitted to the SEC's findings and have agreed to internal audits and remediation plans to address these problems. Robinhood Securities will pay a $33.5 million penalty, while Robinhood Financial will pay $11.5 million. As part of the settlement, Robinhood has agreed to improve its compliance efforts.