Robinhood pays record fines for “considerable damage” to customers

Robinhood will pay a record fine for causing significant damage to customers, as well as fines of up to $ 70 million for outages and false notices related to the trading platform, as we can see on our latest crypto news today.

The fine is the highest FINRA has ever imposed, so Robinhood is now paying record fines for harming its customers. The online brokerage platform has to pay up to $ 70 million in fines for “serious and widespread damage to customers” related to a series of false notices, failures and approvals from customers for complex transactions are not suitable, as FINRA announced:

“This action sends a clear message. All FINRA member firms, regardless of their size or business model, must adhere to the rules governing the brokerage industry, rules to protect investors and the integrity of the brokerage industry. “

Robinhood’s stock and crypto trading platform experienced a series of outages in 2020 that resulted in the company being unable to fulfill customer orders. According to FINRA, the disruption resulted in careless customers losing thousands of dollars. The temporary service outage remains a big deal for the company as the COO of Robinhood Crypto said the company sees a return on investment to improve the system. When the market collapsed in May, Robinhood managed to stay online while Kraken, Gemini, Binance and Coinbase went under. FINRA found that Robinhood had communicated “negligibly inaccurate and misleading information” since 2016, including displaying the funds traders had in their accounts and misleading customers about the risks they face in transactions.

The regulator is referring to Alex Kearns, a 20-year-old trader who died by suicide after Chiang mistakenly believed he was owed more than $ 700,000 and his family filed a lawsuit alleging the exchange caused the wrongful death by displaying confusing information about margin trading. FINRA provided $ 57 million in fines and Robinhood had to pay $ 12.6 million in interest as a refund to customers. A company spokesperson said:

“Robinhood has invested heavily in improving the stability of our platform, improving our educational resources, and building our customer support, legal and compliance teams. We are happy to leave this behind and look forward to continuing to focus on the customer and democratizing finance for everyone. “

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