The probes investigate the company’s supervision and compliance practices, including failure to respond to signs of potential misconduct. Robinhood is set to pay a USD 26 million civil fine and a USD 3.75 million restitution to customers.
Robinhood’s practice of seizing market orders led to some trades being cancelled and re-entered at inferior prices. The restitution will go to customers who were not aware of the company’s actions.
The trading platform agreed to settle, refusing to admit or deny the accusations, and said it has remediated the problems, which date back to 2014.
In January 2025, two Robinhood broker-dealers, Robinhood Securities and Robinhood Financial, agreed to pay USD 45 million in civil fines to settle a range of SEC charges. The order found that the company failed to accurately report trading activity, comply with short sale rules, submit timely suspicious activity reports, maintain books and records, and safeguard client information.
Other violations made by Robinhood include suspicious activity reporting from January 2020 through March 2022, Robinhood failed to timely investigate suspicious transactions, resulting in systematic failures to file suspicious activity reports. From April 2019 to July 2022, it also failed to implement adequate policies and procedures designed to protect its customers from the risk of identity theft, and had trouble with off-channel communications, failing to maintain and preserve electronic communications in violation of the recordkeeping provisions of the federal securities laws.
The firm also provided unauthorised access to Robinhood Systems, while having trouble retaining brokerage data and maintaining customer communications. In addition, Robinhood Securities alone committed the following violations: fractional share trading stock lending, and electronic blue sheets.
Following this, the two broker-dealers agreed to conduct an internal audit concerning off-channel communications compliance. Robinhood Securities agreed to pay a USD 33.5 million penalty and Robinhood Financial agreed to pay a USD 11.5 million penalty.
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