Netizens prefer beheading or the guillotine? US financial regulatory agency fines Robinhood $70 million

The Financial Industry Regulatory Authority (FINRA) in the United States announced that the online brokerage Robinhood had systemic supervisory failures, resulting in a $70 million fine and restitution, including a $57 million fine and requiring the company to pay approximately $12.6 million in restitution and interest to thousands of affected customers.

This is the largest fine ever imposed by the Financial Industry Regulatory Authority (FINRA) in the United States, highlighting the severity of Robinhood's violations.

FINRA found that Robinhood has been "carelessly communicating false and misleading information" to investors since 2016, providing "false or misleading information" that harmed investors. The penalty imposed by FINRA on Robinhood primarily focuses on the widespread system failures and its options trading procedures that occurred in March 2020.

During that time, Robinhood's trading platform experienced a series of interruptions, leading to the inability to execute customer orders. FINRA stated that this system outage "resulted in individual customers losing tens of thousands of dollars."

In April of this year, Robinhood encountered service interruption issues again, still a problem for the brokerage firm. When the cryptocurrency market crashed in May, Robinhood managed to keep its network running smoothly, while exchanges like Binance, Kraken, Gemini, and Coinbase all experienced outages. Therefore, Robinhood used this to indicate that the company's systems have been effectively improved.

The FINRA report mentioned the tragic case of young user Alex Kearns. In June 2020, due to erroneous messages caused by the system, he mistakenly believed that he had incurred losses of $750,000 in investments, leading him to take his own life. Alex Kearns' parents decided to sue, accusing Robinhood of claiming to stand up for the little guy and democratize finance, but in reality targeting young and inexperienced customers, prompting them to engage in risky trading activities.

As a result, FINRA ordered Robinhood to pay a fine of $57 million and $12.6 million (plus interest) in compensation to thousands of affected customers.

Robinhood neither admits nor denies FINRA's allegations but has agreed to accept the fine.

Robinhood stated that the company has taken extensive remedial measures to address FINRA's allegations, has improved the stability of the trading platform, strengthened oversight of options trading, and claimed: "We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all."