Robinhood Agrees $65 Million Acceptable for 'Misleading Customers'
Online stock trading service Robinhood has agreed to pay a $65 million fine to resolve allegations it misled customers a good order routing arrangement that cost traders huge amount of money, the US Filing announced on Thursday.
The SEC charged the company with neglecting to disclose the “receipt of payments from trading firms for routing customer orders to them, with failing to satisfy its duty to seek the best reasonably available terms to complete customer orders.”
This failure caused clients to accomplish trades at prices which were less than optimal on their behalf, to Robinhood's benefit, the SEC claimed. Overall, customers netted losses close to $34.1 million between October 2021 and June 2021 – despite accounting for the savings gained from not paying a commission – while Robinhood falsely claimed on its website that it is execution quality matched or beat those of its competitors, the SEC said.
Robinhood settled the situation with no admission of guilt and agreed to retain an independent consultant to review its policies and procedures involved with its customer communications, payment for order flow and best execution of customer orders.
The settlement comes a day after a Massachusetts securities regulator accused Robinhood of utilizing aggressive tactics to attract inexperienced investors and neglecting to prevent outages on its platform.