Robinhood is preparing for an IPO set for the 2H of 2021
Robinhood will pay a record $70 million fine, the largest ever slapped down by the Financial Industry Regulatory Authority (FINRA).
The regulator found the popular trading platform misled millions of customers, allowed unqualified accounts to trade options and mishandled a widespread outage in March of 2020.
The penalty sends a “clear message” about breaking the brokerage industry’s rules.
“The fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its customers,” said Jessica Hopper, executive vice president and head of FINRA’s Department of Enforcement in the disclosure.
ROBINHOOD CHANGES PROTOCOLS AFTER CUSTOMER SUICIDE
Part of the enforcement action stemmed by the suicide of Alex Kearns after the 20-year student at the University of Nebraska-Lincoln, mistakenly thought he owed more than $700,000 over a risky options bet.
“For instance, one Robinhood customer who had turned margin “off,” tragically took his own life in June 2020. In a note found after his death, he expressed confusion as to how he could have used margin to purchase securities because, he believed, he had not “turned on” margin in his account. As noted in the settlement, Robinhood also displayed to this individual (and certain other customers) inaccurate negative cash balances” FINRA detailed.
