Robinhood has reached a settlement with state securities regulators regarding operational and technical failures.
The $10.2 million settlement includes the platform’s outages in March 2020 and operational deficiencies prior to March 2021, the North American Securities Administrators Association (NASAA) said in the Thursday (April 6) press release.
These failures left the stock trading and investing platform’s users unable to process trades.
“Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies,” NASAA President Andrew Hartnett said in the release.
An investigation led by state securities regulators in Alabama, California, Colorado, Delaware, New Jersey, South Dakota and Texas found that, prior to March 2021, Robinhood had deficiencies in its review and approval process for options and margin accounts, monitoring and reporting tools, and customer service and escalation protocols, according to the release.
The release added that Robinhood neither admits nor denies the findings, that the regulators found no evidence of willful or fraudulent conduct and that the firm fully cooperated with the investigation.
In a statement provided to PYMNTS, Robinhood Markets Deputy General Counsel and Head of Government Affairs Lucas Moskowitz said the firm is resolving the matter and putting it behind it.
“The settlement relates to past issues that Robinhood has since invested heavily in improving, including the launch of 24/7 chat and phone support, expanding our library of educational materials, and strengthening the way we supervise our technology,” Moskowitz said in the statement. “We remain focused on continuing to break down barriers to the markets for those who were previously kept out.”
As part of the settlement, Robinhood will provide the settling states access to a FINRA-ordered compliance implementation report and, one year after the settlement data, will attest that it is in compliance with the recommendation of the FINRA-ordered independent compliance consultant, according to the release.
As PYMNTS reported in March 2020, the Robinhood platform suffered outages at that time that left stock and options traders out of luck and perhaps out of money during a monster rally that saw stocks soar by more than 4%.
In addition, even as the brokerage operations got running again, some email communications from the support side of the company remained spotty.