Robinhood has reached a $29.75 million settlement with the Monetary Trade Regulatory Authority (FINRA) following a number of investigations into its compliance and oversight practices.
In accordance with FINRA’s assertion on March 7, the settlement consists of $26 million in penalties and $3.75 million in compensation to affected customers. Whereas the corporate didn’t admit to any wrongdoing, it accepted FINRA’s findings and agreed to the settlement phrases.
One of many issues raised by regulators was Robinhood’s failure to observe its buying and selling operations successfully. Between March 2020 and January 2021, the platform skilled heavy buying and selling exercise, which led to delays in its clearing system. As a substitute of addressing these points, Robinhood restricted customers from shopping for sure high-volatility shares, together with GameStop (GME) and AMC Leisure Holdings (AMC).
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Regulators additionally discovered severe gaps in Robinhood’s safety measures. The corporate didn’t detect and reply to manipulative buying and selling exercise, unauthorized account takeovers, and suspicious cash transfers. As well as, hundreds of recent accounts have been opened with out correct id verification, violating Anti-Cash Laundering (AML) laws. FINRA said that Robinhood didn’t have satisfactory methods in place to determine or report fraudulent exercise.
One other situation concerned Robinhood’s dealing with of commerce orders. The corporate transformed market orders into restrict orders with out totally explaining the affect to customers. This observe, generally known as “collaring”, might have resulted in much less favorable commerce execution for patrons.
Robinhood was additionally criticized for mismanaging buyer communications. The corporate promoted social media posts from paid influencers, a few of which contained deceptive claims. In accordance with FINRA, these posts lacked stability and equity, doubtlessly giving traders a false sense of safety about buying and selling on the platform.
DraftKings, a sports activities betting and day by day fantasy sports activities (DFS) firm, not too long ago agreed to a $10 million settlement. What was the corporate concerned in? Learn the total story.
Having accomplished a Grasp’s diploma in Economics, Politics, and Cultures of the East Asia area, Aaron has written scientific papers analyzing the variations between Western and Collective types of capitalism within the post-World Conflict II period.With near a decade of expertise within the FinTech business, Aaron understands all the greatest points and struggles that crypto lovers face. He’s a passionate analyst who is worried with data-driven and fact-based content material, in addition to that which speaks to each Web3 natives and business newcomers.Aaron is the go-to particular person for all the pieces and something associated to digital currencies. With an enormous ardour for blockchain & Web3 schooling, Aaron strives to rework the area as we all know it, and make it extra approachable to finish freshmen.Aaron has been quoted by a number of established retailers, and is a broadcast writer himself. Even throughout his free time, he enjoys researching the market tendencies, and in search of the following supernova.
