Robinhood Settles SEC Charges With $45 Million Payment

Robinhood, an online brokerage company, agreed to pay $45 million to settle issues with the US Securities and Exchange Commission (SEC). The company faced charges for not following some important rules.

These issues include not keeping records properly, not investigating strange transactions, and not protecting customers from identity theft.

Robinhood Faces SEC Fines And Commits To Improving Practices

The fine will be shared by two parts of Robinhood. Robinhood Securities will pay $33.5 million, and Robinhood Financial will pay $11.5 million.

The SEC said Robinhood didn’t handle some risks, like problems with cybersecurity. The company also didn’t keep electronic records or customer messages safe. Robinhood didn’t save important files either.

The SEC also said Robinhood Securities didn’t send needed trading data. The firm didn’t stop market troubles when offering stock loans and small share trades.

Sanjay Wadhwa, from the SEC’s Enforcement Division, said brokers must follow rules to keep investors safe and markets fair.

Robinhood agreed to pay the fine and check their rules and practices. Both parts of Robinhood promised to follow better rules for messages. Robinhood Securities also promised to fix problems with stock loans and trades.

Robinhood began in 2013 and changed trading by letting people trade without fees. This new way of trading pushed other companies, like Vanguard and Fidelity, to also stop charging fees which was a huge change in trading.
By June 2024, 11.8 million people used Robinhood each month, and 2 million paid for extra features.

Robinhood Expands Globally While Addressing Regulatory Challenges

Robinhood is growing and plans to open an office in Singapore. In 2023, the firm started letting people in Europe trade cryptocurrency. Last year, Robinhood began offering brokerage services in the UK.

The SEC wanted to protect investors and keep markets safe. Robinhood worked with the SEC, paid the fine, and agreed to do better.
This shows how financial companies must follow rules to keep customer money and information safe.

Robinhood Markets, Inc. is based in Menlo Park, California. It has an app where people can trade stocks, ETFs, and cryptocurrencies for free. Robinhood also offers wallets for crypto, credit cards, and banking services.

Robinhood earns money from trades. Half of its earnings in Q3 2024 came from payments for trades and crypto price increases. The firm also earn from interest, like loans and savings, which brought in 43%. A small part of their earnings comes from subscriptions.

The company serves 24.3 million customers with funded accounts, has 11.0 million users active each month, and manages $152 billion in assets.