- FINRA orders Robinhood to pay about $70 million to users.
- This is based on the results of an investigation into the stock and crypto trading app.
According to Regulators, the trading app should pay restitution to users. For example, the 20-year-old who committed suicide after a negative error on his balance.
The news came on Wednesday. More so, FINRA stressed it had ordered Robinhood to pay $57 million in fines to the regulatory body. And also, to give about $12.6 million in restoration to some customers.
As per the FINRA announcement, the trading platform caused “widespread and significant harm” to many users. Also, it showed “systemic supervisory failures” from September 2016.
To address the matter, the head of FINRA’s department of enforcement Jessica Hopper said,
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.
The false report which FINRA cited includes charges that Robinhood distorted margin trades. Also, users’ cash holdings in the app accounts, the risk of loss in options transactions, and info regarding margin calls.
Moreover, FINRA noted that Robinhood neither accepted nor denied the charges. But, it agreed to the entry of FINRA’s findings. Further, the Regulators said the firm paid $7 million in restitution to clients who reported seeing incorrect negative balances in their accounts.
Moreover, the regulator referenced this to a 20-year-old Robinhood. The user committed suicide in June 2020 after an inaccurate negative balance of more than $730,000 in his account.