Robinhood to pay $70 million in record settlement with FINRA
[**Ethan Wolff-Mann**](https://www.yahoo.com/author/ethan-wolff-mann)**·Senior Writer**
**Wed, June 30, 2021, 10:34 AM**
The [Financial Industry Regulatory Authority](https://www.finra.org/media-center/newsreleases/2021/finra-orders-record-financial-penalties-against-robinhood-financial) announced that it fined Robinhood $57 million and ordered the online brokerage to pay approximately $12.6 million in restitution, plus interest, to thousands of customers for a total settlement of $70 million.
"The sanctions represent the largest financial penalty ever ordered by FINRA and reflect the scope and seriousness of the violations," the authority wrote, noting "significant harm" to "millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so."
The wide-ranging settlement covers trading outages, options-trading approval processes, incorrect display of data, customer service practices, and [even its checking and savings debacle from 2018](https://finance.yahoo.com/news/robinhood-launch-checking-accounts-3-211615271.html). (To be clear, the settlement is not related to the so-called meme-stock frenzy of early 2021 when, at one point, Robinhood temporarily stopped customers from buying shares of several companies, including GameStop.)
This is a notable step in the meteoric growth of Robinhood, the stock trading app that some argue helped herald the "gamification" of Wall Street. The company's introduction of free trades forced other brokerages to respond with zero-cost trades to stay competitive. That swashbuckling attitude that changed the industry, however, was exactly what Finra impugned. Following the rules, the authority, argued, are paramount in the industry.
"Compliance with these rules is not optional and cannot be sacrificed for the sake of innovation or a willingness to ‘break things’ and fix them later,” Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement, said in Finra's press release.
(Though Robinhood "accepted" the settlement, it did not officially admit or deny the allegations.)
**Robinhood says it has fixed most of the problems**
The settlement will no doubt embolden Robinhood's critics, but it also represents catharsis for the company as it grows up — and looks toward a long rumored and anticipated IPO. Robinhood said it has taken “numerous remedial measures” to address Finra's charges, detailing them in a "corrective action statement" attached to the Finra release.
“Robinhood has invested heavily in improving platform stability, enhancing our educational resources, and building out our customer support and legal and compliance teams,” Robinhood said in a statement to Yahoo Finance. “We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all.”
The company said it had completed the “restructuring and enhancement of its legal, compliance, and anti-fraud functions; strengthening of its supervisory structure and written supervisory procedures, including with respect to supervision of technology; expansion of customer support, including with respect to options and margin trading; remediation of certain customer communications and data displays at issue in the AWC; and improved supervision of options trading.”
[***Ethan Wolff-Mann***](https://www.yahoo.com/author/ethan-wolff-mann) *is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter* [*@ewolffmann*](https://twitter.com/ewolffmann)*.*