Robinhood To Pay $10.2 Million Fine for Trade Halt During Pandemic
Robinhood, a leading fintech firm known for its cryptocurrency and stock trading platform, is facing fines of over $10 million as per the California Department of Financial Protection and Innovation. This comes after an investigation revealed operational and technical failures at Robinhood during the pandemic-hit month of March 2020, resulting in customers being unable to trade on the platform.
Robinhood Settles in Multistate Probe
The investigation conducted by state securities regulators found that the California-based brokerage firm, which is known for providing free stock trades for retail consumers, had multiple faults in its operations. Among the concerns highlighted were the lack of due diligence before allowing options trading, failure to notify complaints to a regulator, and lack of oversight of technology required for providing essential broker-dealer services.
Furthermore, in March 2020, Robinhood experienced significant system disruptions, causing customers to miss out on trades and rendering several features of the platform inaccessible. States such as Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas have agreed to be bound by the terms of the settlement.
Andrew Hartnett, Iowa’s securities regulator, commented on the settlement, saying, “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.”
The Robinhood Saga
During the pandemic-induced surge in online trading, Robinhood’s online platform was offline for an entire trading day in March 2020, leading to multiple lawsuits from disgruntled customers who missed out on trading opportunities. In response to this news, Robinhood’s stock price (HOOD) has increased by approximately 3% and is currently trading at $10.02 at the time of publishing.
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