Robinhood settles with state securities regulators for $10 million

Quick Take

  • Robinhood will pay $10.2 million in penalties after a probe by seven state securities regulators found the company harmed investors.
  • The investing platform’s outages in March 2020 sparked the investigation.

Robinhood will pay $10.2 million in penalties for harming “main street investors,” after the company’s platform outages in March 2020 sparked a probe by seven state securities regulators. 

“Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies,” North American Securities Administrators Association President Andrew Hartnett said in a press release. 

The settlement comes after a North American Securities Administrators Association investigation, which was led by state securities regulators in Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas. 

Robinhood did not immediately respond to a request for comment. 

Robinhood under scrutiny

Robinhood’s operations came under scrutiny in March 2020, when its platform experienced outages while hundreds of thousands of investors were using the app to make trades. Before March 2021, regulators say Robinhood had “deficiencies” in its review and approval process for options and margin accounts. Some users were unable to process trades, even as some stock prices dropped, due to weaknesses in Robinhood’s customer service and escalation protocols.

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