On Mar. 7, FINRA fined Robinhood for AML, supervision violations.
FINRA accepted letter of acceptance, waiver, consent (AWC) from Robinhood Financial, LLC and Robinhood Securities, LLC for AML, supervisory and disclosure violations.
Allegations
Robinhood Financial provided customers with inaccurate or incomplete disclosures regarding its practice of collaring market orders by converting them to limit orders.
Failed to establish, implement reasonable anti-money laundering programs, firms failed to detect, investigate or report suspicious activity, including manipulative trading
Also failed to establish reasonable customer identification program, resulted in the firms opening accounts when it had not reasonably verified the customer’s identity.
RHS failed to reasonably supervise clearing technology system, failed to reasonably respond to several red flags of processing delays due to increased demand on system.
Clearing system experienced severe latency in 2021 due to surge in trading volume and volatility, impacted clearing operations and ability to satisfy regulatory obligations.
RHF failed to supervise and retain social media communications promoting firm that were posted by paid social media influencers, posts included misleading statements.
Failure to comply with aspects of firm’s reporting obligations for blue sheets securities trading information, FINRA trade reporting facilities, and the Consolidated Audit Trail.
Robinhood Financial and Robinhood Securities consented to censure, $26 million fine, restitution from RHF to affected customers totaling $3,751,578.12 plus interest.
Restitution from Robinhood Securities to customers, totaling $5,807 plus interest, remediating issues identified in AWC and implemented supervisory system, procedures
Also RHS to pay regulatory transaction fees as required for unreported fractional share trades, RHS to resubmit corrected versions of the erroneous or incomplete blue sheets.
