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.
Based on 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 considerations 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 an alternative 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, 1000’s of latest accounts have been opened with out correct identification verification, violating Anti-Cash Laundering (AML) laws. FINRA acknowledged that Robinhood didn’t have enough methods in place to establish 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 impression to customers. This apply, 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. Based on FINRA, these posts lacked stability and equity, probably giving buyers a false sense of safety about buying and selling on the platform.
DraftKings, a sports activities betting and each day fantasy sports activities (DFS) firm, lately agreed to a $10 million settlement. What was the corporate concerned in? Learn the complete 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 trade, Aaron understands all the greatest points and struggles that crypto fanatics 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 trade newcomers.Aaron is the go-to individual for every little thing and something associated to digital currencies. With an enormous ardour for blockchain & Web3 schooling, Aaron strives to remodel the house as we all know it, and make it extra approachable to finish inexperienced persons.Aaron has been quoted by a number of established shops, and is a broadcast creator himself. Even throughout his free time, he enjoys researching the market tendencies, and searching for the following supernova.
