Robinhood has agreed to pay $29.75 million to settle regulatory probes by the Financial Industry Regulatory Authority (FINRA). The settlement includes a $26 million fine and $3.75 million in restitution to customers, stemming from failures in its supervision and compliance practices. The company was found to have ignored red flags related to anti-money laundering violations and inadequate oversight of trading activities.
FINRA’s investigation revealed that Robinhood failed to properly supervise its clearing system, especially during periods of heightened market volatility. The regulator cited delays in processing transactions between March 2020 and January 2021, coinciding with trading restrictions on meme stocks such as GameStop and AMC. Additionally, Robinhood reportedly did not adequately investigate suspicious trading activities or prevent customer accounts from being compromised.
Another key issue involved Robinhood’s failure to verify customer identities before opening accounts, as well as insufficient anti-money laundering protocols. The firm was also criticized for failing to monitor and retain social media communications, particularly promotional content from paid influencers that contained misleading claims. These violations raised concerns about investor protection and compliance with financial regulations.
This settlement follows a separate $45 million agreement reached in January with U.S. securities regulators over violations of securities laws. Despite these regulatory challenges, Robinhood reported strong financial performance, with record net income of $916 million and significant growth in crypto trading revenue. However, the company’s repeated compliance issues highlight ongoing scrutiny from regulators as it continues expanding its financial services.
