Robinhood to pay $65M fine to settle SEC charges for misleading customers

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Additionally, the Commission found that online brokerage startup falsely claimed between October 2018 and June 2019 that its execution quality matched or beat that of its competitors. In fact, Robinhood provided inferior trade prices that deprived customers of a total of $34.1 million even after taking into account the savings from not paying a commission.

In a statement, SEC Enforcement Division Director Stephanie Avakian said, “Robinhood provided misleading information to customers about the true costs of choosing to trade with the firm. Brokerage firms cannot mislead customers about order execution quality.”

Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit, commented,  “Robinhood failed to seek to obtain the best reasonably available terms when executing customers’ orders, causing customers to lose tens of millions of dollars. Today’s action sends a clear message that the Commission will not allow brokers to ignore their obligations to customers.”

Robinhood settled with the SEC without admitting or denying the allegations against it.