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ROBINHOOD REACHES $10.2M SETTLEMENT WITH SECURITIES REGULATORS FOR PLATFORM
OUTAGE


INTERNATIONAL BUSINESS TIMES NEWS

NEWSTEX BLOGS INTERNATIONAL BUSINESS TIMES NEWS

Publish Date: 07 Apr 2023 13:10

Length: 596 words

KEY POINTS



 * •Robinhood was subpoenaed by the SEC in February over custody issues and
   cryptocurrency listing
 * •The NASAA investigation stemmed from platform outages in March 2020
 * •The NASAA said Robinhood committed six violations
 * •For more breaking global news visit IBTimes.com



Robinhood Markets Inc., an American financial services company, reached a $10.2
million settlement with state securities regulators for allegedly "failing
investors."

"The North American Securities Administrators Association (NASAA) today said
Robinhood Financial LLC will pay up to $10.2 million in penalties for
operational and technical failures that harmed main street investors," state
securities regulators said in a press release titled , "State Securities
Regulators Announce $10 Million Settlement with Robinhood for Failing
Investors."

The settlement stemmed from a multi-state investigation conducted by authorities
in Alabama, Colorado, California, Delaware, New Jersey, South Dakota and Texas
over allegations that Robinhood caused harm to investors by failing to oversee
technology, which caused outages and prevented millions from trading in March
2020. It was the time when "hundreds of thousands of investors were relying on
the Robinhood app to make trades," NASAA claimed.

Aside from that, state securities regulators also discovered deficiencies in
Robinhood's review and approval process for margin accounts.

The NASAA also found "weaknesses in the firm's monitoring and reporting tools,
and insufficient customer service and escalation protocols that in some cases
left Robinhood users unable to process trades even as the value of certain
stocks was dropping."

NASAA president Andrew Hartnett said that the settlement reflects multi-state
efforts to work together to benefit the investors. "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," he
said.

The American financial services company, according to the NASAA committed six
violations, which include "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; and failure to report all customer complaints to FINRA
and state securities regulators, as may be required."

Robinhood Markets deputy general counsel and head of government affairs Lucas
Moskowitz said the company is resolving the issue and would like to move
forward.

"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, adding, "we remain focused on continuing to break
down barriers to the markets for those who were previously kept out."

Robinhood was subpoenaed by the U.S. Securities and Exchange Commission (SEC) in
February over custody issues and cryptocurrency listing.

The subpoena issued by the financial regulator is about the crypto broker's
"cryptocurrency listings, custody of cryptocurrencies, and platform operations,"
Robinhood said in a regulatory filing in February.

Link to the original story.

Author: Nica Osorio

Copyright: Delivered by Newstex LLC. All Rights Reserved Copyright 2023
International Business Times News

Harvest Date: 22 May 2023 18:45

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