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Robinhood, a leading fintech firm behind the cryptocurrency and stock trading platform, is projected to pay more than $10 million in fines according to the California Department of Financial Protection and Innovation. This comes after Robinhood underwent operational and technical failures in the pandemic-hit March of 2020 which left many customers unable to trade on the platform.
Robinhood Settles In Multistate Probe
In the course of the investigation that was carried out by state securities regulators, it was discovered that the California-based brokerage firm — an avant-garde in providing free stock trades for retail consumers — had faults in many aspects of its operations. According to regulators, Robinhood did not undertake due diligence before permitting options trading, failed to notify complaints to a regulator, and failed to oversee technology that was necessary to provide users with fundamental broker-dealer services, among other concerns.
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Moreover, in March of 2020, the platform encountered a slew of system disruptions, which resulted in customers missing out on trades while a significant number of the site’s features remained inaccessible. Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas were among the states that agreed to be bound by the terms of the settlement. While speaking about the settlement, Andrew Hartnett, Iowa’s securities regulator was quoted as saying:
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.
The Robinhood Saga
The company’s online platform went offline for the entirety of a trading day in March 2020, during a time when the pandemic was driving an unprecedented boom in online trading and likewise expanding the company’s user base. However, the outage was followed by multiple lawsuits, which were caused by the dissatisfaction of customers who had missed out on trading opportunities
In light of this news, the stock price of Robinhood (HOOD) increased by roughly 3% and is currently exchanging hands at $10.02 during the time of publishing.
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