Broker Robinhood will pay a $45 million fine for numerous violations of the US Securities Act

What’s new? Online broker Robinhood will pay the US Securities and Exchange Commission (SEC) $45 million in a case alleging violations of more than 10 provisions of the Securities Act. According to an SEC press release, subsidiaries Robinhood Securities and Robinhood Financial violated several important regulatory requirements, including those related to protecting customer information, recordkeeping, and filing suspicious activity reports.

Press release

What else is known? The regulator specifies that from January 2020 through March 2022, Robinhood failed to investigate suspicious transactions in a timely manner and, as a result, filed related reports with delays. In addition, from April 2019 to July 2022, the platform lacked policies and procedures to protect customers from identity theft.

Separately, security issues with the platform itself are also mentioned. For example, from June 2021 through November 2021, Robinhood did not adequately address its known risks related to remote access vulnerabilities to internal systems. As a result, in November 2021, unknown persons gained unauthorized access to the platform and offloaded information on millions of customers.

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It is also noted that the platform did not properly support electronic communications, including with customers. The platform did not save copies of the main operational databases to protect them from deletion or modification, which is also a violation of the Securities Act.

Robinhood is also said to have violated provisions of the SHO regulatory framework designed to combat abusive short selling related to the processing and collection of order data from May 2019 through December 2023.

According to the SEC statement, broker’s both subsidiaries admitted to certain violations and agreed to pay fines, for Robinhood Securities it will be $33,5 million and for Robinhood Financial it will be $11,5 million.

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Last September, Robinhood’s cryptocurrency division paid $3,9 million to settle a California DOJ lawsuit alleging violations of the state’s commodities laws.