In another massive regulatory blow ahead of the company's initial public offering, Robinhood Financial has been fined nearly $70 million for a slew of charges levied by U.S. regulators, the Financial Industry Regulatory Authority announced Wednesday.

FINRA has fined Robinhood $57 million and has ordered it to pay $12.6 million in restitution, plus interest, to thousands of customers who "suffered significant harm" as a result of company practices—marking the biggest fine the regulator has ever levied against a company.

As part of the settlement, Robinhood will pay back more than $7 million lost by thousands of customers as a result of "false and misleading information" the brokerage provided, including an inaccurate negative cash balance that led to the tragic death by suicide of a 20-year-old in June 2020, FINRA said.

More recently, FINRA found that between January 2018 to February this year, the company failed to supervise its broker-dealer technology that helps it accept and execute customer orders, leading to a series of "serious" outages that prevented customers from accessing their accounts during bouts of historic market volatility.

The settlement comes after a slew of other regulator fines—including a $65 million settlement with the Securities and Exchange Commission in December.

According to FINRA, the settlement resolves several charges against Robinhood, including the firm's failure to exercise due diligence before approving customer accounts and providing false or misleading information to customers.

A Robinhood spokesperson told Forbes by email the company is “glad to put this matter behind us” and pointed out it’s “invested heavily in improving platform stability, enhancing educational resources, and building out customer support and legal and compliance teams.”


“This action sends a clear message: All FINRA member firms, regardless of their size or business model, must comply with the rules that govern the brokerage industry, rules which are designed to protect investors and the integrity of our markets,” FINRA's Jessica Hopper said in a statement.


Boasting roughly 13 million customers, Robinhood has faced mounting regulatory action over the past year targeting critical aspects of the firm's business model. In December, the SEC said Robinhood repeatedly misled customers about its revenue sources and failed to meet trade-execution standards—a practice that ultimately left customers out on more than $34 million over a period of three years. And in April, the Massachusetts Securities Division, which previously accused Robinhood of gamifying its platform and steering customers to bad investments, filed an administrative complaint against the brokerage for allegedly failing to protect vulnerable investors and posing a “substantial and continued risk to Massachusetts investors.” The regulator is seeking a revocation of Robinhood’s state brokerage license.

To Watch For

Robinhood was hoping to start trading this month when it filed to go public in March, but according to a Bloomberg report last week, the firm has faced a weeks-long slowdown due to a back-and-forth with the SEC. Regulators are purportedly asking questions about the brokerage's cryptocurrency trading business, which skyrocketed in popularity this year amid the market's massive boom and bust.

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.