Robinhood CEO Vlad Tenev
Photo:
Us House Tv Via Cnp / Zuma Press
Robinhood Markets Inc. is in talks to pay a fine for settling investigations into his options trading and stock trading app outage in March 2020, according to a securities filing.
The Securities and Exchange Commission, national regulatory authorities and the Financial Industry Regulatory Authority, Wall Street’s self-regulatory arm, are investigating Robinhood’s behavior in those cases, including how Robinhood “exposes cash and purchasing power to clients and the approval processes for options trading. the company said in the application.
Separately, the Financial Regulator and the Attorney General of New York, among other regulators, are investigating cases where unauthorized actors take over the accounts of Robinhood users.
Two subsidiaries – Robinhood Financial and Robinhood Securities – are currently negotiating a settlement with Finra over the outage and options trading, which may include allegations of Finra rule violations, a fine, refunds to customers and the hiring of a compliance advisor.
The probes could lead to losses of at least $ 26.6 million, according to the filing.
Robinhood has come under fire for the way it handles customer options trading. Alex Kearns, a 20-year-old college student, died of suicide last summer after thinking he had suffered huge losses in options trading on Robinhood.
His family recently filed a death tort lawsuit against Robinhood, accusing the company of contributing to Mr. Kearns’ death through “misleading communications” about its investments and “virtually nonexistent” customer service. They seek unspecified damages.
Executives from Robinhood and other companies testified before Congress on Thursday after January’s trade frenzy with GameStop and other securities expressing concerns about the integrity of the U.S. stock market and the rules that apply to it. Photo Illustration: Ang Li (Originally published Feb. 18, 2021)
Write to Peter Rudegeair at [email protected]
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