Robinhood Financial Settles SEC Charges for $65M

Robinhood Financial agreed on Thursday morning to pay $65 million to settle Securities and Exchange Commission allegations that the broker failed to properly inform clients that it sold their stock orders to different financial firms.

Robinhood Financial agreed on Thursday morning to pay $65 million to settle Securities and Exchange Commission allegations that the broker failed to properly inform clients that it sold their stock orders to different financial firms.

In a statement, the Securities and Exchange Commission said that Robinhood also agreed to have an outside consultant monitor its compliance with rules that require companies to provide best execution for trades. 

Robinhood, which is known for its smart-phone app that offers commission-free trading, has gained notoriety during the COVID-19 crisis by attracting a massive customer base of young investors.

In a statement, the US agency said that the case involved disclosures from the year 2015 to late 2018 by a Robinhood unit. The company, which didn’t admit or deny the Securities and Exchange Commission’s allegations, said it is now fully transparent in its communications with customers about how it makes money.

“The settlement relates to historical practices that do not reflect Robinhood today. We recognize the responsibility that comes with having helped millions of investors make their first investments, and we’re committed to continuing to evolve Robinhood as we grow to meet our customers’ needs,” Robinhood’s chief legal officer Dan Gallagher said in a statement.


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