{"id":287767,"date":"2021-06-30T20:45:00","date_gmt":"2021-06-30T17:45:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/finra-orders-robinhood-to-pay-70m-due-in-part-to-significant-harm-platform-caused-users\/"},"modified":"2021-06-30T20:45:00","modified_gmt":"2021-06-30T17:45:00","slug":"finra-orders-robinhood-to-pay-70m-due-in-part-to-significant-harm-platform-caused-users","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/finra-orders-robinhood-to-pay-70m-due-in-part-to-significant-harm-platform-caused-users\/","title":{"rendered":"# FINRA orders Robinhood to pay $70M due in part to ‘significant harm’ platform caused users"},"content":{"rendered":"

“# FINRA orders Robinhood to pay $70M due in part to ‘significant harm’ platform caused users <\/strong>”
\n<\/p>\n

The U.S. Financial Industry Regulatory Authority is penalizing Robinhood to the tune of roughly $70 million based on the results of an investigation into the stock and cryptocurrency trading app<\/a>.<\/p>\n

In a Wednesday announcement, the Financial Industry Regulatory Authority, or FINRA, said<\/a> it had ordered Robinhood to pay $57 million in fines to the regulatory body as well as provide roughly $12.6 million in restitution to certain customers. FINRA alleged the trading platform caused \u201cwidespread and significant harm\u201d to thousands of users and exhibited \u201csystemic supervisory failures\u201d\u00a0starting as early as September 2016.<\/p>\n

\u201cThe fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood\u2019s violations, including FINRA\u2019s finding that Robinhood communicated false and misleading information to millions of its customers,\u201d said the head of FINRA\u2019s department of enforcement Jessica Hopper. <\/p>\n

The false information to which FINRA referred includes allegations Robinhood misrepresented margin trades, users\u2019 cash holdings in the app accounts, the risk of loss in options transactions, how much buying power users had, and information regarding margin calls. According to the regulatory body, \u201cRobinhood neither admitted nor denied the charges, but consented to the entry of FINRA\u2019s findings.\u201d<\/p>\n

Regulators said the firm was responsible for paying $7 million in restitution to customers who reported seeing inaccurate negative cash balances in their accounts. The body referenced Alexander Kearns, a 20-year-old Robinhood user who committed suicide in June 2020 after an erroneous negative balance of more than $730,000 appeared in his account. In addition, FINRA ordered the trading platform to pay more than $5 million to users affected by Robinhood\u2019s outages between 2018 and 2020, alleging that many users had lost up to tens of thousands of dollars in trades the platform was unable to execute during significant market volatility. <\/p>\n

Related: <\/em><\/strong>Crypto-friendly trading app Robinhood faces lawsuit from securities regulators<\/em><\/strong><\/p>\n

The penalties paid to FINRA directly seem to be based on Robinhood\u2019s company policies and apparent failure to provide a clear picture of market data for customers. The regulatory body said between January 2018 and December 2020 the trading platform failed to report thousands of user complaints to FINRA following all the aforementioned issues. In addition, Robinhood\u2019s process to approve customers for options trading relied on algorithms rather than \u201cfirm principals.\u201d FINRA said this method had resulted in the approval of thousands of users who did not meet the company\u2019s eligibility criteria or whose accounts should have otherwise been flagged.<\/p>\n

The results of the FINRA investigation come as Robinhood is planning to move forward with an initial public offering, or IPO. However, the firm is currently under scrutiny from the U.S. Securities and Exchange Commission, reportedly resulting in the delay of the company going public. Robinhood initially planned to launch its IPO this month but has reportedly postponed the offering to July.<\/p>\n