Two units of Robinhood Markets Inc. agreed to pay $45 million in civil penalties to settle a range of US Securities and Exchange Commission allegations, the regulator said Monday.
Robinhood Securities LLC and Robinhood Financial LLC’s missteps include failing to report suspicious activity on time and not preserving electronic communications records, among other securities law violations, the SEC said in a cease-and-desist order.
The Statement
“Two Robinhood firms failed to observe a broad array of significant regulatory requirements, including failing to accurately report trading activity, comply with short sale rules, submit timely suspicious activity reports, maintain books and records, and safeguard customer information,” Sanjay Wadhwa, the SEC’s acting enforcement director, said in a statement.
Robinhood, best known for commission-free trading, didn’t admit or deny the SEC’s allegations. The firm said it was pleased to resolve the matters.
“As the SEC’s order acknowledges, most of these are historical matters that our broker-dealers have previously addressed,” Lucas Moskowitz, Robinhood’s general counsel, said in a statement. “We look forward to working with the SEC under a new administration.”
About Robinhood
Robinhood debuted as a public company in 2021 and quickly found itself in the middle of the “meme stock” craze that roiled the retail trading market. It has since built out a suite of consumer-facing products, including credit cards and retirement accounts.
It has also found itself in regulatory crosshairs. In December 2020, before its initial public offering, the firm agreed to pay the SEC $65 million to settle allegations that it failed to properly inform clients it sold their stock orders to high-frequency traders and other firms.
In May 2024, it warned investors that it could face an SEC enforcement action over its crypto business. At the time, the company said the SEC’s enforcement staff sent the firm what’s called a Wells notice, indicating that the agency made an initial determination to pursue action.
Monday’s settlement with the SEC doesn’t cover any crypto matters. The company didn’t have an update on that issue, a Robinhood spokesperson said.
Disclaimer: This story has been published from a wire agency feed without modifications to the text.