Robinhood Financial Settles $29.75M for Anti-Money Laundering Failures

Robinhood Financial Faces $29.75M Fine for Compliance and Supervision Issues

Robinhood Financial– Online trading platform Robinhood has agreed to pay $29.75 million to settle multiple investigations conducted by the Financial Industry Regulatory Authority (FINRA) regarding its supervision and compliance practices. The settlement includes a $26 million civil fine and $3.75 million in restitution to customers.

FINRA’s investigation revealed that Robinhood had failed to act on clear signs of potential misconduct. The company was found to have violated anti-money laundering (AML) regulations, as well as supervisory and disclosure rules. Between March 2020 and January 2021, Robinhood Financial failed to properly supervise its clearing system despite delays in processing transactions, which coincided with the platform’s restriction of trading in “meme stocks” such as GameStop (GME) and AMC Entertainment (AMC).

Trading Manipulations and Account Security Concerns

Robinhood Financial and Robinhood Securities were also criticized for failing to detect and report manipulative trades, suspicious money movements, and incidents where customer accounts were hacked. Additionally, Robinhood opened thousands of accounts without properly verifying customers’ identities, which violated reasonable AML protocols.

The company also faced issues with its social media strategy. FINRA noted that Robinhood failed to supervise and retain communications from paid influencers, which breached regulatory standards. Robinhood’s decision to “collar” market orders, converting them to limit orders, led to inaccurate or incomplete disclosures to customers, resulting in the $3.75 million restitution.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.