FINRA Orders Robinhood Financial to Pay $3 75 Million in Restitution to Customers; Fines Robinhood Financial and Robinhood Securities for Anti-Money Laundering, Supervisory and Disclosure Violations

The company has been criticized for routing orders to market makers that pay the most instead of those that offer the best order execution. The following month, the Bank of Lithuania granted the company a brokerage license to operate in Lithuania. In August that year, the company announced additional layoffs of 23% of its workforce, mostly in operations, marketing and program management.

FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. FINRA’s use of fine monies is limited to specific purposes set forth in its public Financial Guiding Principles, which are approved by its Board of Governors. The decision to halt trading was criticized by customers as well as politicians including Ted Cruz and Alexandria Ocasio-Cortez. On January 28, 2021, several stockbrokers, including Robinhood, restricted the trading of certain stocks, most notably GameStop, to meet collateral requirements at its clearing house, the National Securities Clearing Corporation, following an effort by users of the r/wallstreetbets subreddit to drive up share prices. Robinhood Financial was also ordered to pay $3.75 million in restitution to certain customers whose market orders were restricted and canceled, leading them to re-enter their orders and receive executions at a less favorable price.

• It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies.
• Passwords were then hashed using the Bcrypt algorithm and the company advised customers to change their passwords.
• Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time.
• The Office of the Attorney General is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool.
• Robinhood has targeted millennials as customers; in March 2025, the average age of its customers was 35.

Investment products and services are offered through Moomoo Financial Inc., Member SIPC./FINRA. Real-time quote and/or trade prices are not sourced from all markets. We make no representations or warranties regarding the advisability of investing in any particular securities or utilizing any specific investment strategies. The brokerage is teaming up with market maker Susquehanna International…

• Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.
• The founders presented the mobile app at LA Hacks in April 2014 and launched a beta release in December on the Apple App Store.
• U.S. brokerage services are offered through Robinhood Financial LLC, a registered broker dealer (member SIPC) and U.S. clearing services through Robinhood Securities, LLC, a registered broker dealer (member SIPC).
• Robinhood is adding a futures and derivatives exchange and clearinghouse to better serve the firm’s prediction-markets platform, which offers trades on sports, the economy and other events.

Securities and Exchange Commission in May 2024 alleging that the company had violated securities laws over crypto tokens traded on its platform; Robinhood countered that cryptocurrencies are not securities and are not covered by securities laws. The company went public via an initial public offering on the Nasdaq on July 29, 2021, raising approximately $2.1 billion and valuing Robinhood at about $32 billion. In June 2025, the company launched trading in tokenized ETFs and stocks in the European Union. In the second quarter of 2020, during the 2020 stock market crash, compared to the first quarter of 2020, trading volumes increased 139%, more than any other major brokerage. Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously built high-frequency trading platforms for financial institutions in New York City. Robinhood Markets, Inc. is an American financial services company based in Menlo Park, California.

Robinhood, IBD Stock Of The Day, Near New Buy Points After 260% Surge In 2025

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Attorney General Bonta Secures $3.9 Million Settlement with Cryptocurrency Company Robinhood

Supporting documentation for any claims, if applicable, will be furnished upon request. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. For information on use of our services, please see our Terms of Use. Authors/presenters may own the stocks they discuss. Historical investment performances are no indication or guarantee of future success or performance. Information in Investor’s Business Daily is for informational and educational purposes only and should not be construed as an offer, recommendation, solicitation, or rating to buy or sell securities.

For more information, visit FINRA is a not-for-profit organization dedicated to investor protection and market integrity. FINRA publicly itemizes and discloses how it uses https://scamforex.net/ fine monies each year.

U.S. brokerage services are offered through Robinhood Financial LLC, a registered broker dealer (member SIPC) and U.S. clearing services through Robinhood Securities, LLC, a registered broker dealer (member SIPC). The services and products offered on the website are subject to applicable laws and regulations, as well as relevant service terms and policies. $0 commission trading is available only to U.S. residents trading in the U.S. markets through Moomoo Financial Inc. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies.

– Provides a stock brokerage platform that offers commission-free trading intended to democratize finance.

Coinbase (COIN) is rolling out stock trading and prediction markets on its app, making a big expansion from cryptocurrencies. The company does not allow trading in mutual funds, preferred stocks, bonds, some high-risk penny stocks, and new positions in options on their expiration dates in the last 30 minutes of the trading day. The company is named after Robin Hood, based on its mission to “provide everyone with access to the financial markets, not just the wealthy”. Its platform is available in the U.S., the UK, and, for trading cryptocurrency and tokenized stocks and ETFs only, in the European Union. A self-custody cryptocurrency wallet, Robinhood Wallet, and related services are offered through Robinhood Non-Custodial, Ltd. (a limited company organized in the Cayman Islands). In recent years, cryptocurrency has risen in popularity as a form of digital investment, and it is important to remember that the cryptocurrency market is highly xcritical courses scam volatile and there is no government guarantee or insurance for crypto assets.

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The founders presented the mobile app at LA Hacks in April 2014 and launched a beta release in December on the Apple App Store. They aimed to design a mobile app that was free, easy to use, and addictive. Robinhood has targeted millennials as customers; in March 2025, the average age of its customers was 35. Approximately 2 billion option contracts are traded annually on the Robinhood platform. Sherwood Media, LLC produces fresh and unique perspectives on topical financial news.

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In 2022, Attorney General Bonta urged Californians to stay informed and protect their money when investing in the cryptocurrency market by launching a new webpage with information on cryptocurrencies and how to avoid scams and other pitfalls. Despite these assurances, Robinhood did not tell customers that there were instances in which it arranged for trading venues to hold customer assets for extended periods. Robinhood also represented to its customers that Robinhood itself held all its customers’ cryptocurrencies purchased through Robinhood’s platform. Robinhood misled customers by advertising it would connect to multiple trading venues, to ensure customers receive the most competitive prices between the venues, which was not always true. The investigation by the California Department of Justice concluded that Robinhood sold commodities contracts in violation of the CCL by allowing customers, who hoped their investment would become more valuable shortly, to buy cryptocurrencies without actually delivering these assets to customers.

Amid Widespread Food Hardship, Robin Hood Ramps Up Emergency Food Grantmaking in Q4 2025, Releases New Data

Say Technologies, LLC provides technology services for shareholder engagement and communication. Account access and trade execution may be affected by factors such as market volatility. Electronic trading also involves risks.

“Today’s action reminds FINRA members that compliance with core regulatory obligations remains critical to safeguarding and serving all investors.” WASHINGTON—FINRA has ordered Robinhood Financial to pay $3.75 million to its customers, and fined Robinhood Financial and Robinhood Securities $26 million for violating numerous FINRA rules, including failing to respond to red flags of potential misconduct. Registered representatives can fulfill Continuing Education requirements, view their industry CRD record and perform other compliance tasks. However, after additional negative reviews on the app that resulted in a 1.1-star rating, Google confirmed that the new reviews do not violate Google policies and will not be removed. Following the controversy, the Robinhood mobile app was review bombed on the Google Play app store.

The company has been referred to as an innovator in zero-commission stock trading, as it relies on other sources of revenues. The company has 27.4 million funded customers and $279 billion in assets under custody. It also offers cryptocurrency wallets, wealth management, credit cards and other banking services, some in partnership with banks insured by the FDIC, as well as a news website, Sherwood.News. Brokerage services are offered through Robinhood U.K. Ltd, an authorised and regulated firm by the U.K. The responsiveness of the trading system may vary due to market conditions, system performance, and other factors. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount.

FINRA regulates one critical part of the securities industry—member brokerage firms doing business in the U.S. The case was dismissed by the Miami federal court in November 2021 on the grounds that the plaintiffs fell short of providing direct evidence of an antitrust conspiracy and that its terms of service allowed the company to prohibit trading by customers. The company began once again allowing trading in the affected stocks on January 29.

In February 2024, the company paid $7.5 million and agreed to overhaul its digital engagement practices to settle the remaining claims. In August 2022, Robinhood’s cryptocurrency division was fined $30 million by the New York State Department of Financial Services for allegedly violating anti-money-laundering and cybersecurity regulations, in the department’s first cryptocurrency-related enforcement action. The company also was criticized for not responding timely to inquiries by Kearns about the negative balance. In June 2020, 20-year old University of Nebraska–Lincoln student Alexander E. Kearns committed suicide after seeing a negative cash balance of $730,000 in his Robinhood account after the expiration, exercise, and assignment of options positions, likely a bull spread. In November 2021, a voice phishing scheme on a Robinhood employee resulted in about 5 million customers having their email addresses stolen, 2 million customers having their full names disclosed and 300 customers having their dates of birth disclosed.

To learn more about cryptocurrency and scams in the digital currency space, please visit oag.ca.gov/crypto. Attorney General Bonta is committed to protecting consumers and educating the public about significant risks in the digital currency space. I am dedicated to using all the tools available to my office to protect California consumers in the face of advancing technology in the marketplace.” “While cryptocurrency is fairly new, California has strong and enduring consumer protection laws that protect Californians against misrepresentation, including by cryptocurrency companies,” said Attorney General Bonta. The Office of the Attorney General is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool. Join IBD Live to watch and discuss the market action in real time with a team of top market analysts.

The incident did not stem from a breach of company systems; the users’ personal email addresses had been compromised outside of Robinhood. Also in December 2020, Robinhood was sued in the United States District Court for the Northern District of California for failing to disclose to customers that it received payment for order flow, leading to inferior trade prices. In December 2020, the company paid $65 million to settle accusations by the U.S.