BREAKING: Robinhood given biggest ever penalty by Wall Street Regulator, a whopping $70 Million

The Financial Industry Regulatory Authority (FINRA) placed its biggest penalty yet on Robinhood.

FINRA is a government-authorized not-for-profit organization that reviews US broker-dealers to safeguard investors and maintain market integrity. FINRA’s penalties emerge from a range of violations in the last five years. In total, the organization fined Robinhood $57 million and ordered the company to pay $12.6 million in reimbursement to thousands of impacted customers.

Within its report, FINRA refers to numerous violations Robinhood committed since 2016. “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.”

Second, since the company began offering options trading in late 2017, it “failed to exercise due diligence before approving customers to place options trades. … Robinhood approved thousands of customers for options trading who either did not satisfy the firm’s eligibility criteria or whose accounts contained red flags indicating that options trading may not have been appropriate for them.”

The third penalty reads, “From January 2018 to February 2021, Robinhood failed to reasonably supervise the technology that it relied upon to provide core broker-dealer services, such as accepting and executing customer orders.” Lastly, Robinhood violated FINRA regulations by failing to report tens of thousands of customer complaints. “The fine imposed on this matter, the highest fine ever imposed by FINRA, reflects the scope and gravity of Robinhood’s violations,” said Jessica Hopper, FINRA enforcement officer.