Robinhood has agreed to pay $45 million in civil penalties to settle fees of securities regulation violations.
In keeping with a Jan. 13 assertion, this settlement follows an investigation by the US Securities and Change Fee (SEC) into the actions of its subsidiaries, Robinhood Securities LLC and Robinhood Monetary LLC.
The penalties embody $33.5 million from Robinhood Securities and $11.5 million from Robinhood Monetary.
The breaches
In keeping with Sanjay Wadhwa, Appearing Director of the SEC’s Division of Enforcement, Robinhood’s failures spanned a number of important areas, together with inaccurate reporting, poor cybersecurity measures, and insufficient fraud prevention.
Wadhwa said:
“At the moment’s order finds that two Robinhood corporations failed to look at a broad array of serious regulatory necessities, together with failing to precisely report buying and selling exercise, adjust to brief sale guidelines, submit well timed suspicious exercise stories, preserve books and information, and safeguard buyer data.”
The SEC discovered that these corporations did not adjust to varied regulatory necessities from 2019 to 2022. Among the many violations had been delays in investigating and reporting suspicious transactions between January 2020 and March 2022.
Extra breaches included failing to implement enough protections towards id theft from April 2019 to July 2022. A cybersecurity weak spot, which continued from June to November 2021, additionally led to unauthorized entry to customers’ knowledge.
The corporations had been additional accused of not sustaining correct information of digital communications, a key regulatory requirement.
Robinhood Securities confronted extra scrutiny for points associated to fractional share buying and selling, inventory lending practices, and failures in regulatory reporting. To deal with these issues, the agency agreed to certify that it has carried out measures to forestall comparable violations.
Each entities admitted to the SEC’s findings and agreed to be reprimanded. In addition they dedicated to conducting an inner assessment to strengthen digital communications compliance.
Robinhood crypto
Though the latest SEC order doesn’t implicate Robinhood’s crypto operations, the agency faces regulatory challenges. Final 12 months, the agency disclosed receiving a Wells discover from the monetary regulator, signaling potential enforcement motion.
Robinhood’s 2024 report reveals substantial exercise in its crypto phase. As of November 2024, the platform recorded $119 billion in crypto buying and selling quantity and managed $38 billion in digital property underneath custody.
The corporate additionally revealed that it expanded its crypto choices within the US, including tokens like Solana and Cardano, which pushed the entire variety of accessible digital property within the area to twenty.
