Crypto-Friendly Trading Giant Robinhood To Pay Up to $10,200,000 to US Regulators Over 2020 Platform Outages

Trading giant Robinhood will pay up to $10.2 million to multiple state regulatory agencies in a settlement over issues that caused the platform to temporarily go out in 2020.

In a new press release, the North American Securities Administrators Association (NASAA), an international organization that aims to protect investors from fraud, says Robinhood will pay up to $10.2 million in penalties for “operational and technical failures that harmed main street investors.”

The NASAA, which launched an investigation into Robinhood after its March 2020 outages alongside state securities regulators from Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas, found that the trading platform had numerous deficiencies.

The order found the following violations at the time, according to the press release:

• “Negligent dissemination of inaccurate information to customers, including regarding margin and risk associated with multi-leg option spreads.
• Failure to have a reasonably designed customer identification program.
• Failure to supervise technology critical to providing customers with core broker-dealer services.
• Failure to have a reasonably designed system for dealing with customer inquiries.
• Failure to exercise due diligence before approving certain option accounts.
• Failure to report all customer complaints to FINRA [Financial Industry Regulatory Authority] and state securities regulators, as may be required.”

Though Robinhood will pay the penalty, the firm has neither admitted nor denied the findings.

Robinhood will also retain an independent compliance consultant and provide access to a FINRA-ordered compliance report to settling states. In a year, the trading giant will confirm to Alabama, the leading state, that it has complied with the recommendations of the consultant or taken steps to effectively address the recommendations, according to the press release.

Recently, the crypto-friendly trading platform announced that it’s launching new crypto wallet on Apple’s mobile operating system with support for popular digital assets such as meme token Shiba Inu (SHIB), top altcoin Ethereum (ETH), and layer-2 scaling solution Polygon (MATIC).

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