Watch lawmakers grill Robinhood's CEO
New York (CNN Business)Robinhood is being ordered to pay about $70 million for harming millions of customers. It’s the largest penalty ever imposed by Wall Street’s self-regulator.
The controversial trading app was accused Wednesday by the Financial Industrial Regulatory Authority of “systemic supervisory failures” and hurting investors by giving them “false or misleading information.”
FINRA’s sanctions on Robinhood focus on large-scale system outages that hit the platform in March 2020 as well as its options trading procedures.
“The fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood’s violations,” Jessica Hopper, head of FINRA’s department of enforcement, said in a statement.
FINRA fined Robinhood $57 million and ordered the startup to pay about $12.6 million in restitution, plus interest, to thousands of harmed customers.
Alluding to Robinhood’s Silicon Valley roots, Hooper said that compliance with FINRA’s rules “is not optional” and can’t be sacrificed by a willingness to “‘break things’ and fix them later.”
In a statement, Robinhood noted that it has heavily invested in improving the platform’s stability, educational offerings, customer support and legal teams.
“We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all,” a Robinhood spokesperson said in the statement.
The record-setting FINRA penalties come as Robinhood explores a blockbuster initial public offering.
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