January 30th, 2024 by WCBC Radio
Maryland Attorney General Anthony G. Brown’s Securities Division announced that it has joined a multistate settlement with Robinhood Financial LLC, which will pay up to $10.2 million in penalties for operational and technical failures that harmed Main Street investors.
The settlement stems from an investigation regarding Robinhood’s failures concerning the retail market. The investigation was spearheaded by state securities regulators in Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas coordinated through the North American Securities Administrators Association (NASAA).
The Consent Order entered to settle this matter lists “Findings of Facts” that arose from an investigation sparked by Robinhood platform outages in March 2020, a time when hundreds of thousands of investors were relying on the Robinhood app to make trades. In addition, prior to March 2021, Robinhood’s review and approval process for options and margin accounts was inadequate, there were weaknesses in the firm’s monitoring and reporting tools, and its customer service and escalation protocols were insufficient, leaving some Robinhood users unable to process trades even as the value of certain stocks was dropping.
“Today’s agreement is the result of the diligent work by state securities regulators to ensure investors are protected and treated fairly by financial services firms,” said the Attorney General. “We will continue to hold these firms accountable to the standards they are required to uphold and ensure they always meet their obligations to their clients.”
