Robinhood, the app that looks like the darling of a stock trading platform and video game, received a record $ 70 million bill from a U.S. watchdog for causing the loss millions to investors in total because of misleading financial information and system failures.
The Financial Industry Regulatory Authority (FINRA) ordered the software company to pay $ 57 million in fines and reimburse customers $ 12.6 million to cover their losses with interest.
“The fine imposed in this case, the highest ever imposed by FINRA, reflects the extent and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its clients “, Jessica Hopper, Head of the FINRA Department Enforcement, mentionned in a report.
Founded in 2013, the brokerage firm gained popularity during the COVID-19 pandemic. As the coronavirus turned lives around the world upside down, people flocked to the app in hopes of making money with cryptocurrencies, skyrocketing stocks, so called meme stocks, options, and more. . However, FINRA said Robinhood, which tries to provide a relatively easy-to-use interface for stock and currency trading, was not as useful and clear as it could have been for something. as important as personal investments.
And, we are told, this has been going on for years:
And the years:
And the years:
Robinhood before mentionned “Unprecedented charge” sparked the March 2020 fiasco. Failure to trade properly during the downtime cost individual investors tens of thousands of losses, and Robinhood will pay at least $ 5 million in compensation to these people, the regulator said.
Also in January 2021, the company simply blocked people from buying specific, particularly volatile stocks, such as Gamestop and AMC. And between 2018 and 2020, tens of thousands of users filed written complaints that Robinhood failed to forward to FINRA as required by law, the authority said.
On top of that, thousands of customers have suffered total losses of over $ 7 million due to Robinhood’s mismanagement of cash balances and other financial information, the watchdog said, and those people will be reimbursed.
The most serious case cited by the watchdog was the death twenty years old Alex kearns in June 2020. He committed suicide after thinking that he had accumulated a debt of $ 750,000 following a risky options transaction in the application when in fact the software had simply displayed “a balance of negative cash flow inaccurate “. Kearns’ parents sued the company earlier this year for negligence and wrongful death.
Robinhood will spit to settle the whole matter and will not admit or deny any wrongdoing, according to FINRA. The biz was not immediately available for comment. ®