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FINRA Fines Robinhood Around $70 Million: How the Company Responded

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Robinhood is being fined by the Financial Industry Regulatory Authority (FINRA) for $57 million and has ordered the company to pay $12.6 million in restitution. 

FINRA announced the fine in a statement on its website on Wednesday, June 30. It stated, "...FINRA found in its investigation that, despite Robinhood’s self-described mission to “de-mystify finance for all,” during certain periods since September 2016, the firm has negligently communicated false and misleading information to its customers. The false and misleading information concerned a variety of critical issues, including whether customers could place trades on margin, how much cash was in customers’ accounts, how much buying power or “negative buying power” customers had, the risk of loss customers faced in certain options transactions, and whether customers faced margin calls."

“This action sends a clear message—all FINRA member firms, regardless of their size or business model, must comply with the rules that govern the brokerage industry, rules which are designed to protect investors and the integrity of our markets. Compliance with these rules is not optional and cannot be sacrificed for the sake of innovation or a willingness to ‘break things’ and fix them later,” said Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement. “The fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its customers.”

In a statement to TheStreet Robinhood's Jacqueline Ortiz Ramsay said, "Robinhood has invested heavily in improving platform stability, enhancing our educational resources, and building out our customer support and legal and compliance teams. We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all.”

The company has also claimed that it has made changes and "investments" in a blog post on its website.

"We’ve made significant improvements to the way we supervise our technology and our engineering infrastructure," the company wrote. "For example, we’ve taken steps to address the root causes of the March 2020 outages, reduce the risk of future outages, and increase the resilience of relevant systems, including by increasing system redundancy, better-distributing load on Robinhood’s systems, and deploying a risk-based testing system."

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