https://www.businesswire.com/news/home/20250307774863/en/FINRA-Orders-Robinhood-Financial-to-Pay-3.75-Million-in-Restitution-to-Customers-Fines-Robinhood-Financial-and-Robinhood-Securities-for-Anti-Money-Laundering-Supervisory-and-Disclosure-Violations/

FINRA has ordered Robinhood Financial to pay $3.75 million to its customers, and fined Robinhood Financial and Robinhood Securities $26 million for violating numerous FINRA rules, including failing to respond to red flags of potential misconduct.

“In recent years, the brokerage industry has continued to evolve and develop innovative services and technologies that have allowed millions of new investors to access the markets,” said Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA. “Today’s action reminds FINRA members that compliance with core regulatory obligations remains critical to safeguarding and serving all investors.”

FINRA found, among other things, that:

Robinhood Financial provided customers with inaccurate or incomplete disclosures regarding its practice of “collaring” market orders by converting them to limit orders. Robinhood Financial has agreed to pay restitution of $3.75 million to certain customers whose market orders were collared and canceled, and who then re-entered their orders and received executions at an inferior price.

Robinhood Financial and Robinhood Securities failed to establish and implement reasonable anti-money laundering programs, which caused the firms to fail to detect, investigate or report suspicious activity, including manipulative trading, suspicious money movements and instances where customers’ accounts were taken over by third-party hackers. Robinhood Financial also failed to establish a reasonable customer identification program, which resulted in the firm opening thousands of accounts when it had not reasonably verified the customer’s identity.

Robinhood Securities failed to reasonably supervise its clearing technology system, which was used to clear trades for Robinhood Financial. The firm failed to reasonably respond to several red flags of processing delays due to increased demand on the system. Ultimately, the clearing system experienced severe latency in January 2021 due to a surge in trading volume and volatility, which, in turn, impacted Robinhood Securities’ clearing operations and its ability to satisfy certain regulatory obligations.

Robinhood Financial failed to reasonably supervise and retain social media communications promoting the firm that were posted by paid social media influencers. Some of these communications included statements that were promissory or not fair and balanced, and thus misleading to investors.

Robinhood Securities failed to comply with numerous aspects of the firm’s reporting obligations for blue sheets (securities trading information), FINRA trade reporting facilities and the Consolidated Audit Trail.

FINRA found that in each of these areas, and other areas described in the letter of acceptance, waiver and consent (AWC), Robinhood Financial and Robinhood Securities failed to establish a reasonable supervisory system to comply with FINRA rule obligations, including in some areas failing to reasonably respond to red flags of potential misconduct. Some of the areas addressed in the AWC were self-reported by the firms.

In settling these matters, Robinhood Financial and Robinhood Securities consented to the entry of FINRA’s findings, without admitting or denying the charges. The firms also agreed to certify that they remediated the issues identified in the AWC.

FINRA makes available disciplinary actions and other information on its Disciplinary Actions Online database. In addition, FINRA publishes on its Monthly Disciplinary Actions page a summary of disciplinary actions against firms and individuals for violations of FINRA rules; federal securities laws, rules and regulations; and the rules of the Municipal Securities Rulemaking Board. FINRA’s use of fine monies is limited to specific purposes set forth in its public Financial Guiding Principles, which are approved by its Board of Governors. FINRA publicly itemizes and discloses how it uses fine monies each year.