Robinhood has agreed to a $45 million settlement with the U.S. Securities and Exchange Commission after its brokerage and trading entities were found to have violated several securities laws.

second to request Announced on January 13, it alleges that Robinhood Securities LLC and Robinhood Financial LLC committed more than 10 violations of securities law provisions ranging from failing to report suspicious activity to protecting customer information, among other things, “between 2018 and April 2024 on "The least."

According to the commission, “both companies acknowledged certain findings in the matter and agreed to be subject to oversight,” with Robinhood Securities agreeing to pay a $33.5 million fine and Robinhood Financial agreeing to pay an $11.5 million fine, bringing the total settlement to $45 million.

Robinhood violations

From January 2020 to March 2022, the company failed to promptly investigate and report any suspicious activity, undermining its obligations under anti-money laundering laws. Additionally, between April 2019 and July 2022, Robinhood failed to implement adequate identity theft protection policies, exposing customers to increased fraud risks, the order said.

Cybersecurity vulnerabilities also plagued the platform. Notably, between June and November 2021, Robinhood failed to address known risks related to remote system access, which resulted in a third party gaining unauthorized access to sensitive data from millions of users.

Robinhood also failed to maintain and maintain off-channel communications and certain customer communications between 2020 and 2021, in violation of federal securities laws.

Additionally, from May 2019 through December 2023, Robinhood failed to comply with Regulation SHO, which governs short selling practices, in its fractional stock trading and stock lending programs.

The SEC order also noted that both entities violated multiple rules under the federal securities laws, including provisions designed to protect customer privacy and ensure accurate recordkeeping and reporting.

Furthermore, Robinhood Securities also admitted to errors in more than 11,800 electronic blue papers filed with the SEC over a five-year period, resulting in inaccurate reporting of at least 392 million transactions. EBS are official data requests used by regulators to monitor trading activity and investigate potential market violations.

Sanjay Wadhwa, Acting Director of the Enforcement Division at the SEC, stressed the importance of brokers and traders fulfilling their legal obligations to support market integrity and fairness within the framework of... statementPointing out that such compliance is “essential to the Committee’s broader efforts to protect investors and promote integrity and fairness” in financial markets.

Robinhood's cryptocurrency business was not mentioned in the order or included in the scope of these violations; However, this does not mean that the company is out of the water. Last year, the brokerage firm receive Wells Notice from the Securities and Exchange Commission.

According to a regulatory filing filed at the time, SEC staff recommended pursuing enforcement actions regarding Robinhood's cryptocurrency listings, custody practices, and platform operations.

The Commission currently has ongoing civil enforcement cases against several prominent cryptocurrency companies, including... Binance, Coinbaseand Ripple Labs.