Robinhood Fined $10.2 Million for Customer Care Failures

Robinhood has been ordered to pay $10.2 million in fines for negatively impacting regular investors after their platform experienced technical difficulties in March 2020, prompting a probe by seven state securities regulators.

According to North American Securities Administrators Association President Andrew Hartnett, “Robinhood repeatedly failed to serve its clients,” however, the settlement aims to ensure that the company prioritizes its customer service obligations and addresses any shortcomings.

The investigation was conducted by state securities regulators in Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas. Robinhood has not yet responded to requests for comment.

Before March 2021, regulators found deficiencies in Robinhood’s approval process for options and margin accounts. Many users could not make trades as the platform experienced outages, and customer service and escalation protocols were deemed inadequate.

Robinhood was also accused of disseminating inaccurate information to customers and failing to have proper customer identification protocols.

The regulators concluded that the company failed to supervise the technology necessary to provide customers with essential broker-dealer services and did not report all customer complaints to the relevant authorities.

Robinhood has not admitted to any wrongdoing but fully cooperated with the investigation, and the California Department of Financial Protection and Innovation found no evidence of fraudulent conduct.

According to DFPI Commissioner Clothilde Hewlett, platforms such as Robinhood must adhere to legal requirements to provide consumers and investors with sensible protections.

Author

Alexander Stefanov

Reporter at CoinsPress

Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.