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Two Robinhood broker-dealers agreed to pay $45 million in mixed penalties to settle administrative charges by the Securities and Exchange Commission that they violated greater than 10 separate securities legislation provisions associated to their brokerage operations.
The violations by Robinhood Securities LLC and Robinhood Financial LLC associated to failures to report suspicious buying and selling in a well timed method, failing to implement enough identification theft protections, and failing to adequately deal with unauthorized entry to Robinhood laptop techniques, the SEC stated Monday.
The two Robinhood entities additionally had longstanding failures to keep up and protect digital communications, didn’t retain copies of operational databases, and failed to keep up some buyer communications as legally required between 2020 and 2021, in response to the company.
The SEC stated that Robinhood Securities alone failed for greater than 5 years “to offer full and correct securities buying and selling data, referred to as blue sheet information” to the company.
According to an SEC order made public Monday, “During the [Electronic Blue Sheets] Relevant Period, in response to requests from the Commission, Robinhood Securities made no less than 11,849 EBS submissions to the Commission that contained inaccurate data or omissions, ensuing from eleven sorts of errors.”
“Those errors resulted within the misreporting of EBS information for no less than 392 million transactions,” the order stated.
Robinhood Securities additionally failed, from May 2019 by way of December 2023, to adjust to Regulation SHO in reference to its inventory lending and fractional share buying and selling program, the SEC stated. Regulation SHO was designed to deal with abusive short-selling practices.
Sanjay Wadhwa, the appearing director of the SEC’s Division of Enforcement, in an announcement, stated, “It is crucial to the Commission’s broader efforts to guard traders and promote the integrity and equity of our markets that broker-dealers fulfill their authorized obligations when finishing up their varied market capabilities.”
“Today’s order finds that two Robinhood companies failed to watch a broad array of great regulatory necessities, together with failing to precisely report buying and selling exercise, adjust to brief sale guidelines, submit well timed suspicious exercise reviews, keep books and information, and safeguard buyer data,” Wadhwa stated.
Robinhood Markets General Counsel Lucas Moskowitz, in an announcement, stated, “We are happy to resolve these issues. As the SEC’s order acknowledges, most of those are historic issues that our broker-dealers have beforehand addressed.”
“We are well-positioned to proceed main the trade in growing the progressive services and products our clients need and have to take part in U.S. and world monetary markets,” Moskowitz stated. “We look ahead to working with the SEC beneath a brand new administration.”
