Robinhood pays $45M to settle SEC violations over reporting and cybersecurity missteps

Robinhood has agreed to pay $45 million in civil penalties to settle fees of securities legislation violations.

In response to a January 13 assertion, this settlement follows an investigation by the U.S. Securities and Trade Fee (SEC) into the actions of its subsidiaries, Robinhood Securities LLC and Robinhood Monetary LLC.

The fines embrace $33.5 million from Robinhood Securities and $11.5 million from Robinhood Monetary.

The infringements

In response to Sanjay Wadhwa, performing director of the SEC’s Division of Enforcement, Robinhood’s failures embrace a number of vital areas, together with inaccurate reporting, poor cybersecurity measures and insufficient fraud prevention.

Wadhwa acknowledged:

“Right this moment’s determination finds that two Robinhood firms did not adjust to a variety of essential regulatory necessities, together with failing to precisely report buying and selling exercise, failing to adjust to brief gross sales guidelines, submitting well timed suspicious exercise reviews, sustaining books and data and defending buyer info.”

The SEC discovered that these firms did not adjust to a number of regulatory necessities between 2019 and 2022. Among the many violations have been delays in investigating and reporting suspicious transactions between January 2020 and March 2022.

Further breaches included failure to implement ample identification theft protections between April 2019 and July 2022. A cybersecurity weak point, which lasted from June to November 2021, additionally led to unauthorized entry to customers’ knowledge.

The businesses have been additional accused of failing to correctly keep digital communications, an essential authorized requirement.

Robinhood Securities acquired further consideration for points associated to fractional share buying and selling, inventory lending practices and regulatory reporting deficiencies. To deal with these points, the corporate agreed to state that it has applied measures to stop related violations.

Each entities admitted the SEC’s findings and agreed to be reprimanded. They’ve additionally dedicated to conducting an inner assessment to strengthen compliance with digital communications guidelines.

Robinhood crypto

Whereas the current SEC order doesn’t handle Robinhood’s crypto enterprise, the corporate is going through regulatory challenges. The corporate introduced final yr acquired a Wells discover from the monetary regulator, indicating potential enforcement actions.

Robinhood’s 2024 report reveals substantial exercise in its crypto section. As of November 2024, the platform recorded $119 billion in crypto buying and selling quantity and managed $38 billion in digital belongings below custody.

The corporate additionally revealed that it has expanded its crypto providing within the US with tokens like Solana and Cardano, bringing the overall variety of digital belongings obtainable within the area to twenty.

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