Robinhood, a crypto trading platform, has agreed to pay $45 million in penalties to resolve claims of breaking more than 10 financial regulations.
The settlement involves two company entities, Robinhood Securities LLC and Robinhood Financial LLC. The US Securities and Exchange Commission (SEC) found that these entities failed to meet regulatory standards.
Robinhood Securities will pay $33.5 million in penalties, and Robinhood Financial will pay $11.5 million. Both payments are due by January 27.
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A statement from the SEC, published on January 13, noted several issues, such as inaccurate reporting of trading activity, missed deadlines for suspicious activity reports, failure to protect customer information, and shortcomings in maintaining records.
The investigation found that between 2020 and 2021, Robinhood failed to keep electronic communications from customers as required. It also revealed errors in over 11,800 Electronic Blue Sheets—official data requests from the SEC—leading to incorrect or missing information for at least 392 million transactions.
The SEC also cited issues with compliance related to "Regulation SHO", a rule meant to prevent abusive short-selling practices, from December 2019 to May 2022. In 2021, a cybersecurity issue allowed unauthorized access to customer information, which affected millions of users.
Furthermore, the company did not report suspicious activities on time from January 2020 to March 2022. Its measures to protect against identity theft were insufficient from April 2019 to July 2022.
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