Online broker Robinhood Financial LLC has been ordered to pay $70 million for ‘systemic supervisory failures’ that harmed thousands of consumers in the process, an industry regulator announced on Wednesday.
The firm will pay a $57 million penalty and $12.6 million in restitution to harmed consumers. The penalty was the largest ever issued by the Financial Industry Regulatory Authority (FINRA), according to the agency. The regulator said the firm misled consumers and exposed them to excessively risky trading tools, and also failed consumers when its services suffered multiple outages.
“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 company spokesperson said in an emailed statement, noting the brokerage has invested heavily in customer resources and support as well as compliance.
Robinhood in December agreed to pay $65 million to the Securities and Exchange Commission (SEC) to settle charges it misled customers about its revenue sources.
The online startup, which has been credited with helping popularize trading among millennials, has seen scrutiny from regulators and lawmakers increase in recent months as retail investors have piled into so-called “meme stocks” such as GameStop Corp and AMC Entertainment Holdings.
(Reporting by Pete Schroeder and Chris Prentice in Washington Editing by Paul Simao)