Online trading platform Robinhood has agreed to pay $29.75 million to settle several probes from the Financial Industry Regulatory Authority (FINRA) related to the company’s supervision and compliance practices.
The settlement figure consisted of a $26 million civil fine and $3.75 million restitution to customers, FINRA said on March 7. Robinhood failed to “respond to red flags of potential misconduct,” FINRA said, leading to Anti-Money Laundering and supervisory and disclosure violations.
FINRA found that Robinhood Financial failed to reasonably supervise its clearing system despite there being noticeable processing delays due to increased demand between March 2020 and January 2021, which coincides with when Robinhood restricted trading in so-called meme stocks such as GameStop (GME) and AMC Entertainment Holdings (AMC).
FINRA said Robinhood Financial and Robinhood Securities also failed to detect, investigate or report