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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 Monetary LLC associated to failures to report suspicious buying and selling in a well timed method, failing to implement satisfactory identification theft protections, and failing to adequately tackle unauthorized entry to Robinhood laptop methods, the SEC mentioned Monday.
The 2 Robinhood entities additionally had longstanding failures to take care of and protect digital communications, did not retain copies of operational databases, and failed to take care of some buyer communications as legally required between 2020 and 2021, in keeping with the company.
The SEC mentioned that Robinhood Securities alone failed for greater than 5 years “to offer full and correct securities buying and selling info, often called blue sheet information” to the company.
Based on an SEC order made public Monday, “Through the [Electronic Blue Sheets] Related Interval, in response to requests from the Fee, Robinhood Securities made no less than 11,849 EBS submissions to the Fee that contained inaccurate info or omissions, ensuing from eleven forms of errors.”
“These errors resulted within the misreporting of EBS information for no less than 392 million transactions,” the order mentioned.
Robinhood Securities additionally failed, from Could 2019 by December 2023, to adjust to Regulation SHO in reference to its inventory lending and fractional share buying and selling program, the SEC mentioned. Regulation SHO was designed to handle abusive short-selling practices.
Sanjay Wadhwa, the appearing director of the SEC’s Division of Enforcement, in a press release, mentioned, “It’s important to the Fee’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 features.”
“As we speak’s order finds that two Robinhood companies failed to watch a broad array of serious regulatory necessities, together with failing to precisely report buying and selling exercise, adjust to quick sale guidelines, submit well timed suspicious exercise studies, preserve books and data, and safeguard buyer info,” Wadhwa mentioned.
Robinhood Markets Basic Counsel Lucas Moskowitz, in a press release, mentioned, “We’re happy to resolve these issues. Because the SEC’s order acknowledges, most of those are historic issues that our broker-dealers have beforehand addressed.”
“We’re well-positioned to proceed main the trade in creating the progressive services and products our clients need and have to take part in U.S. and international monetary markets,” Moskowitz mentioned. “We sit up for working with the SEC underneath a brand new administration.”
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