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two robinhood The broker-dealers agreed to pay a combined $45 million in fines to settle administrative costs from the Securities and Exchange Commission for violating more than 10 separate securities law provisions related to their brokerage operations.
The violations by Robinhood Securities LLC and Robinhood Financial LLC related to failure to timely report suspicious transactions, failure to implement appropriate identity theft protections and failure to properly address unauthorized access to Robinhood computer systems, the SEC said. announced on Monday.
Both Robinhood entities also had longstanding failures to maintain and preserve electronic communications, failed to maintain copies of operational databases and failed to retain certain customer communications as required by law between 2020 and 2021.
The SEC found that Robinhood Securities alone “failed to provide complete and accurate securities trading information, known as blue sheet data,” for more than five years.
According to the SEC order issued Monday, “During the period relevant to the (Electronic Blue Sheet), at the Commission’s request, Robinhood Securities submitted to the Commission at least 11,849 EBS that contained inaccuracies or omissions due to 11 types of errors. .”
“These errors resulted in EBS data being incorrectly reported for at least 392 million transactions,” the order said.
Robinhood Securities also failed to comply with Regulation SHO with respect to its stock lending and fractional stock trading programs from May 2019 to December 2023, the SEC said. Regulation SHO is designed to address abusive short selling practices.
“Ensuring that broker-dealers meet their legal obligations when trading is essential to the Commission’s broader efforts to protect investors and promote honesty and fairness in the markets,” Sanjay Wadhwa, Acting Director of the SEC’s Enforcement Division, said in a statement. . “It offers a variety of market features.”
“Today’s order alleges that two Robinhood companies failed to accurately report trading activity, fail to comply with short-selling rules, fail to file suspicious activity reports in a timely manner, maintain books and records, and fail to protect customer information, among other violations. “We were found to have failed to comply with important regulatory requirements.” Wadwa said.
“We are pleased to have resolved these issues. As acknowledged in the SEC’s order, many of these issues are historical issues that our broker-dealers have previously addressed,” Lucas Moskowitz, Robinhood Markets general counsel, said in a statement. .
“We are well positioned to continue to lead the industry in developing innovative products and services that our customers want and need to participate in U.S. and global financial markets,” Moskowitz said. “We look forward to working with the SEC under the new administration.”
