From a regulatory point of view, 2025 has been something of a rollercoaster ride for Robinhood – and the ticket price has been eyewatering.
In January, the SEC announced that the firm had agreed to pay $45 million after it found 10 separate securities law violations by two of its broker-dealers including failures to comply with off-channel communications requirements and cybersecurity vulnerabilities in its systems.
In February, there was better news as the SEC dropped an investigation into Robinhood’s cryptocurrency business, which a former commissioner at the SEC (who became chief legal officer at the financial services firm last year) said should never have happened.
In March, however, Finra has announced that the firm has agreed to pay $30 million, including a $26 million fine and $3.75 million in restitution to customers for breaching several of the regulator’s rules.
That brings Robinhood’s total fines for 2025 so far to more than $1 million a day.
Finra’s investigation found that Robinhood did not fully disclose to customers how it used the practice of ‘collaring’ market orders, resulting in some customers losing out when re-entering orders.
The regulator also had concerns about the firm’s anti-money laundering programs, supervision of its clearing technology system, reporting requirements and auditing.
The firm’s use of social media ‘finfluencers’ was also highlighted with a failure to supervise those promoting Robinhood which led to misleading statements.
Finra’s letter of acceptance, waiver and consent noted that in some areas, the firms had failed to reasonably respond to red flags of potential misconduct. Some of the items included in the letter were self-reported by Robinhood.
Robinhood Financial and Robinhood Securities agreed to certify that they remediated the issues identified in the AWC.
“In recent years, the brokerage industry has continued to evolve and develop innovative services and technologies that have allowed millions of new investors to access the markets,” said Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA. “Today’s action reminds FINRA members that compliance with core regulatory obligations remains critical to safeguarding and serving all investors.”
Robinhood’s regulatory rap sheet includes a $70 million fine and restitutions from Finra in 2021, a $65 million payment to settle an SEC investigation into stock orders in 2020, and two relatively small payments to regulators in California and Massachusetts in 2024.
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