By Steve Dickson | Bloomberg
Robinhood Markets Inc. will pay California and six other states as much as $10.2 million in penalties for operational and technical failures after an investigation by state securities regulators that was sparked by outages in 2020.
The settlement involves “deficiencies at Robinhood in its review and approval process for options and margin accounts, weaknesses in the firm’s monitoring and reporting tools, and insufficient customer service and escalation protocols,” the North American Securities Administrators Association said in a news release Thursday.
“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,” Andrew Hartnett, the association’s president, said in the release.
The settlement stems from an investigation by state securities regulators in Alabama, Colorado, California, Delaware, New Jersey, South Dakota and Texas.
“We are resolving this matter with the states and are pleased to put it behind us,” Lucas Moskowitz, Robinhood’s deputy general counsel and head of government affairs, said in a statement. “The settlement relates to past issues that Robinhood has since invested heavily in improving, including the launch of 24/7 chat and phone support, expanding our library of educational materials and strengthening the way we supervise our technology.”
California’s Department of Financial Protection and Innovation said it found no evidence of willful or fraudulent conduct by Robinhood, and that the company cooperated with the investigation.
DFPI said the amount will be split evenly amongst the states. Separately, $12.6 million in restitution for consumers was covered in an order from the Financial Industry Regulatory Authority.
The Southern California News Group contributed to this report.
