Robinhood pays $45M to settle SEC violations over reporting and cybersecurity missteps

Robinhood has agreed to wage $45 cardinal successful civilian penalties to settee charges of securities instrumentality violations.

According to a Jan. 13 statement, this colony follows an probe by the US Securities and Exchange Commission (SEC) into the activities of its subsidiaries, Robinhood Securities LLC and Robinhood Financial LLC.

The penalties see $33.5 cardinal from Robinhood Securities and $11.5 cardinal from Robinhood Financial.

The breaches

According to Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, Robinhood’s failures spanned respective captious areas, including inaccurate reporting, mediocre cybersecurity measures, and inadequate fraud prevention.

Wadhwa stated:

“Today’s bid finds that 2 Robinhood firms failed to observe a wide array of important regulatory requirements, including failing to accurately study trading activity, comply with abbreviated merchantability rules, taxable timely suspicious enactment reports, support books and records, and safeguard lawsuit information.”

The SEC recovered that these firms failed to comply with assorted regulatory requirements from 2019 to 2022. Among the violations were delays successful investigating and reporting suspicious transactions betwixt January 2020 and March 2022.

Additional breaches included failing to instrumentality capable protections against individuality theft from April 2019 to July 2022. A cybersecurity weakness, which persisted from June to November 2021, besides led to unauthorized entree to users’ data.

The firms were further accused of not maintaining due records of physics communications, a cardinal regulatory requirement.

Robinhood Securities faced further scrutiny for issues related to fractional stock trading, banal lending practices, and failures successful regulatory reporting. To code these problems, the steadfast agreed to certify that it has implemented measures to forestall akin violations.

Both entities admitted to the SEC’s findings and agreed to beryllium reprimanded. They besides committed to conducting an interior reappraisal to fortify physics communications compliance.

Robinhood crypto

Although the caller SEC bid does not implicate Robinhood’s crypto operations, the steadfast faces regulatory challenges. Last year, the steadfast disclosed receiving a Wells notice from the fiscal regulator, signaling imaginable enforcement action.

Robinhood’s 2024 study reveals important enactment successful its crypto segment. As of November 2024, the level recorded $119 cardinal successful crypto trading measurement and managed $38 cardinal successful integer assets nether custody.

The institution besides revealed that it expanded its crypto offerings successful the US, adding tokens like Solana and Cardano, which pushed the full fig of disposable integer assets successful the portion to 20.

The station Robinhood pays $45M to settee SEC violations implicit reporting and cybersecurity missteps appeared archetypal connected CryptoSlate.