As per the latest reports, Robinhood has ended up facing a huge fine from one of the non-governmental organizations. Robinhood, which is a popular platform for investing has ended up facing a $70 million fine from the non-governmental organization.
The reports suggest that Robinhood has already agreed to pay the $70 million fine. The particular non-governmental entity that has imposed the fine on Robinhood is the Financial Industry Regulatory Authority (FINRA).
The investing platform has reportedly agreed that it will pay the fine in order to settle the allegations. According to FINRA, Robinhood was involved in causing significant and widespread harm to customers on several instances and fronts. FINRA accused Robinhood that it is not just this year that the firm has caused such harm to customers but it has been doing it for several years.
According to data, it is the all-time highest financial penalty that has been demanded by a non-governmental organization. FINRA is not a firm operating out of its own accord but it has been authorized by Congress. Congress has granted FINRA the permission to oversee and monitor the activities of brokers all over the United States. At present, there are more than a hundred thousand brokers all over the US.
In its investigation report, FINRA has shared some eye-opening and alarming facts about the way Robinhood has been operating. According to FINRA, Robinhood has been involved in providing misleading and false information to millions of customers on the platform.
The firm was accused of providing incorrect/misleading information to customers even in terms of their account balance in the Robinhood application. The platform even misled the customers in terms of placing margin trades and even other services.
FINRA revealed that as a result of sharing false/misleading information, the platform boosted its services. However, in the process, the firm also had customers paying up the cost, and the total figure that the customers had paid was more than $7 million.
Therefore, FINRA claimed that as a result of Robinhood’s unlawful and unethical activities, it is liable for paying restitution to the users that were affected by the misleading information.
The allegations did not stop here as FINRA went on to accuse Robinhood of putting the funds and money of thousands of users by approving options trades for them. These options trades were deemed of high risk and could cost a fortune to the investors if anything bad would have gone down.
Furthermore, FINRA also points out the outages that Robinhood had faced in March of 2020. As per FINRA, the outages continued taking place in March of 2020 and the platform did not do much to prevent them or fix them for good. As a result, millions of users were badly affected by these outages and were deprived of trading normally.