Robinhood, the popular multifaceted trading platform, has agreed to pay a $10.2 million fine to the California Department of Financial Protection and Innovation (DFPI) for operational and technical failures that negatively impacted investors.
The fine comes after a two-year investigation by the North American Securities Administrators Association (NASAA) into Robinhood’s system outages and service unavailability that cost users several trading opportunities.
Regulators accused Robinhood of negligent dissemination of inaccurate information to customers and failing to establish an adequate customer identification program. The company also failed to supervise technology pivotal to providing core customer broker-dealer services and to report customer grievances to the Financial Industry Regulatory Authority (FINRA).
DFPI Commissioner Clothilde Hewlett noted that while Robinhood did not admit wrongdoing, it must comply with common-sense protections for investors and consumers as required by law.
Robinhood also faced a class-action lawsuit and was ordered by FINRA to pay approximately $70 million in compensation for communicating false and misleading information to its customers.
