Minnesota joins settlement against Robinhood Financial
The Minnesota Department of Commerce announced it has joined a multistate settlement against Robinhood Financial due to their operational failures in the retail market.
The settlement is being coordinated by the North American Securities Administrators Association (NASAA) under which Robinhood Financial will pay up to $10.2 million in penalties for operational and technical failures that harmed main street investors. Minnesota will receive $200,000 under the settlement.
“Multistate settlements like this one provide an important avenue for the Minnesota Department of Commerce to protect consumers and ensure a fair and strong marketplace,” said Commerce Assistant Commissioner of Enforcement Jacqueline Olson. “Online financial services companies need to know they are required to follow the law just like businesses physically located in our state.”
The investigation was sparked by Robinhood platform outages in March 2020, when hundreds of thousands of investors were relying on the Robinhood app to make trades. Robinhood had more than 200,000 customers in Minnesota at the time. In addition, there were deficiencies at Robinhood in its review and approval process for options and margin accounts, weaknesses in the firm’s monitoring and reporting tools, and insufficient customer service and escalation protocols that in some cases left Robinhood users unable to process trades even as the value of certain stocks was dropping.”
“This multistate agreement represents states at their best – working together for the benefit of main street investors,” said NASAA President Andrew Hartnett. “Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies.”
Robinhood neither admits nor denies the findings as set out in the states’ orders.