The Securities and Exchange Commission (SEC) has charged Robinhood with violating more than ten securities law provisions. Announced on Monday, the charges stem from Robinhood’s failure to report suspicious trading activities in a timely manner, inadequate identity theft protections, and insufficient responses to unauthorized access to their computer systems. Two affiliated Robinhood broker-dealers have agreed to pay a combined penalty of $45 million as part of a settlement with the SEC.
Between 2020 and 2021, Robinhood reportedly failed to maintain and preserve essential electronic communications, which violated several securities law provisions. The SEC highlighted that the company did not retain operational database copies or certain customer communications, both of which are legally required. These failures contributed to the SEC's decision to pursue administrative charges against the company.
The SEC emphasized that Robinhood's longstanding inadequacies in maintaining and securing electronic records were significant factors in the charges. The commission accused Robinhood of neglecting its duties under securities law provisions, which included failing to report suspicious trading activities and adequately addressing identity theft risks.
In response to these allegations, Robinhood has reached an agreement with the SEC to settle the administrative charges. As part of the settlement, two related Robinhood broker-dealers have agreed to pay $45 million in penalties. This resolution underscores the importance of compliance with securities laws and the need for robust systems to protect customer information and data integrity.
The SEC's action against Robinhood highlights the regulatory body's commitment to enforcing securities laws and holding financial institutions accountable for their actions. By settling these charges, Robinhood aims to move forward while addressing the regulatory concerns raised by the SEC.