The Financial Industry Regulatory Authority on Wednesday levied its largest fine ever, against popular investing app Robinhood. Robinhood, known for letting customers trade stocks through an app, will pay $57 million in fines in addition to $12.6 million in restitution to customers.
Over the course of its investigation, FINRA found that Robinhood violated regulations and showed false and misleading information to customers. Some customers were allowed to place trades with borrowed money, even though they'd turned off that setting in the app, according to FINRA. Others saw inaccurate negative cash balances. FINRA is a nonprofit, self-regulatory agency that oversees member brokerages and exchanges.
Robinhood also failed to report a variety of customer complaints to FINRA, the regulator said, and suffered a number of outages from 2018 through 2021 that caused customer losses, most prominently during the GameStop stock surge. FINRA determined that the outages and system failures were partially due to the lack of a proper continuity plan.
Robinhood neither admitted to nor denied the charges. In a Wednesday blog post, it outlined steps it's taking to better educate customers.
"Robinhood has invested heavily in improving platform stability, enhancing our educational resources, and building out our customer support and legal and compliance teams," said the head of Robinhood's public policy communications, Jacqueline Ortiz Ramsay. "We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all."