La Finra orders Robinhood to pay $ 70 million fine
FT Alphaville is shocked, shocked, to discover that the Robinhood commission free trading app may not have strictly followed the rules when it comes to its very popular service in the stone market.
American Sheriff Finra Just announced he fined the trading platform $ 57 million, in addition to ordering it to pay $ 12.6 million in restitution, plus interest, to clients. The reason? For communicating “false and misleading information to clients” on “a variety of critical issues including whether clients could place trades on margin, how much money was in clients’ accounts, what was the power of buying or ânegative purchasing powerâ of clients, the risk of loss clients face in certain options trades, and whether clients face margin calls â. A mouthful of alleged wrongdoing, that.
This makes it the heaviest sanction ever imposed by the self-regulatory body. For the record, Finra says Robinhood has neither admitted nor denied the charges.
The press release, as you can imagine, contains all kinds of moldy nuggets (or trends?). For example, did you know that Finra discovered that Robinhood offered call options trading to clients without performing due diligence on whether they should have access to these financial products? Wow, who would have guessed?
More on this one to come, we’re sure. $ 70 million may not seem like a lot, but given the apparent political interest in retail investors, we doubt that’s the end of the story.