Constant technical malfunctions and misleading information on client finances led to the highest fine ever issued by FINRA
The Financial Industry Regulatory Authority has issued its highest ever fine of $70 million for Robinhood, after the service provider gave misleading information to clients facing serious financial decisions.
The misleading input was caused by faulty displays of the cash in their account and missing updates on prices or risk assessment during volatile phases of finance. It allowed clients to trade risky derivatives when not appropriate and presented false information on the client’s ability to engage in margin trading.
These errors gained wide-spread attention last year, when a Robinhood user committed suicide for believing he was more than $700,000 in debt. Tragically, this number was merely the result of false display, as the individual had a balance of $16,000.
FINRA cited this case, issuing the financial exchange platform to pay $57 million in fines, and $12,6 million plus interest in restitution to their customers.
Robinhood as a company has stated to improve their standards and tripled its customer support staff since last year to 2,700 employees. This correlates with their highly rapid growth, which exploded during the beginning of the Covid-19 pandemic.
In addition to the fine, FINRA is also investigating the vibrant activities of dubious accounts on Robinhood, with more than 100 accounts likely using the identity of deceased individuals.
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