Wall Street regulator has ordered retail trade exchange planning to pay more than $ 70 million punishment because it causes what is described as “widespread and significant” endangering its customers.
The Financial Industry Regulatory Authority (Finra) announced on Wednesday that it had finished Robinhood $ 57 million and ordered it to pay $ 12.6 million plus a flower restitution to its customers – the largest penalty ever ordered by the regulator.
Robinhood also allows thousands of customers to trade derivative products that are risky when “improper” for them, according to regulators, and provide false or misleading information about how much cash in their accounts, their ability to trade margins, and the risk of losses derivative trade.
Finra quoted the death by committing suicide from young Robinehood customers last year, which mistakenly believed that he had experienced $ 730,165 in losses in margin trading. In fact, his account has a $ 16,000 balance. In a record found after his death, he indicated that he did not believe that he had “turned on” the trade margin on his account.
For more than five years, Robinhood has “failed to build and maintain” the system to comply with effects, said Finra.
“Compliance with these rules is not optional and cannot be sacrificed for innovation or willingness to ‘solve something’ and fix it later,” said Jessica Hopper, Head of the Finna Enforcement Department.
Responding to Finra’s actions, the company said: “Robinhood has invested a lot in improving the stability of the platform, increasing educational resources, and building customer support and legal teams and our compliance. We love to put this problem behind us and hope to continue to focus on our customers and democratize finance for all. “(Then on that day, the company also publishes blog posts that describe how to try to better” fulfill our responsibilities to our customers. “)
Punishment came as a planned petition of the stock market list to take advantage of the explosive growth period. The broker dealer has become identical to the increase in retail day trading since the start of the Pandemic and boom in the trade “MIME Stock”. It has more than doubled the number of users on its platform in the past year, from 13 million at the end of March 2020 to 31 million at this time, according to Finra.
The opening of a doubtful account is another matter marked by Finra. In the period until the end of 2018, Robinhood automatically opened many accounts despite the warning of the potential of identity fraud, including more than 100 accounts where there was “high probability that the customer’s social security number belonging to the person who died”. Robinhood also failed to tell Finra tens of thousands of customer complaints that it was needed to report, said the regulator.