Robinhood agrees to pay $30M to settle regulatory probes

Robinhood has consented to pay $29.75 million to settle investigations by the Financial Industry Regulatory Authority (FINRA) concerning its supervisory and compliance practices.

The settlement includes a civil fine of $26 million and $3.75 million in restitution to affected customers, as announced by FINRA on March 7.

The regulatory body found that Robinhood failed to adequately respond to several "red flags" indicating potential misconduct, which included violations related to Anti-Money Laundering (AML) and supervisory practices.

During the period of increased trading activity between March 2020 and January 2021, particularly during the meme stock trading frenzy involving companies like GameStop and AMC, Robinhood's oversight of its clearing system was deemed insufficient.

FINRA reported that Robinhood Financial did not detect or investigate manipulative trades, suspicious money movements, or instances where customer accounts were compromised by third-party hackers.

Additionally, Robinhood opened thousands of accounts without properly verifying customer identities, leading to further AML compliance issues.

The firm was also criticised for inadequately supervising social media communications, including those from paid influencers, which sometimes contained misleading statements.

The $3.75 million restitution is intended for customers who received inaccurate disclosures regarding market orders that were converted into limit orders, resulting in less favorable trade executions.

Both Robinhood Financial and Robinhood Securities agreed to the findings without admitting or denying any wrongdoing.

This settlement follows a previous $45 million agreement with the U.S. Securities and Exchange Commission (SEC) in January 2025, where Robinhood admitted to certain findings related to record-keeping and trade reporting violations.

Despite these regulatory challenges, Robinhood reported a record net income of $916 million and over $1 billion in revenue for the fourth quarter of 2024, with a significant portion of its transaction-based revenue derived from cryptocurrency trading.