Robinhood Markets, a prominent online trading platform, has reached an agreement to pay $45 million to settle charges from the U.S. Securities and Exchange Commission (SEC). The charges stem from failures in recordkeeping, trade reporting, and cybersecurity compliance, impacting Robinhood’s subsidiaries, Robinhood Securities LLC and Robinhood Financial LLC.
Regulatory Violations Revealed by the SEC
The SEC’s investigation uncovered multiple compliance breaches by Robinhood. These included inaccurate reporting of trading activity, delayed filing of suspicious activity reports and failure to adhere to rules governing short sales and maintain proper records
The regulator also identified deficiencies in Robinhood’s handling of trading data, commonly referred to as “blue sheets,” which are crucial for providing detailed trade information to the SEC.
Off-Channel Communications Under Scrutiny
Robinhood joined other broker-dealers in admitting to non-compliance regarding employee communications on unauthorized platforms. The use of messaging apps and other off-channel platforms for work-related discussions has drawn increased regulatory attention, with firms required to monitor and retain these communications.
Cybersecurity Shortcomings Highlighted
The SEC also criticized Robinhood for failing to address critical cybersecurity risks. These shortcomings added to the firm’s compliance challenges, raising concerns about its ability to safeguard sensitive trading data and investor information.
Robinhood Responds to SEC Findings
In a statement, Robinhood’s General Counsel, Lucas Moskowitz, expressed the company’s commitment to improving compliance practices. “We are pleased to have resolved these matters. Robinhood is well-positioned to continue leading the industry in developing innovative products and services that meet customer needs,” Moskowitz stated.