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Robinhood estimated the settlement with FINRA at $26.6 million

1 March 2021
2071
1 min.
6
Robinhood estimated the settlement with FINRA at $26.6 million

Conflict with FINRA

Digital asset friendly platform Robinhood is in talks with a number of regulators regarding a possible settlement of claims from them. This is according to a statement sent to the US ,Securities and Exchange Commission (SEC).

According to the document, the company is cooperating with the Financial Institutions Regulatory Authority (FINRA), SEC and New York Attorney General's Office.

Robinhood plans to settle with FINRA "certain issues, including outages in March 2020 and options trading". The company predicted that possible fines and penalties could cost at least $26.6m.

"However, we cannot predict whether these negotiations will lead to a resolution of the issues", it said in a statement.

In early March 2020, the Robinhood app was inaccessible for about 17 hours amid high user activity during a short-term market recovery from its collapse. A second failure occurred a few days later.

In February 2021, a US couple criticised Robinhood's options trading policy and accused the company of driving their son to suicide. The trader died after being notified of a negative balance of $730,000.

The platform failed to inform the user that he had options in his account which more than covered the liability. It later lifted the restrictions.

Robinhood had earlier attracted the attention of US authorities by its decision to suspend trading in certain assets amid a plunge in GameStop shares.

According to Reuters, the Robinhood incident is being investigated by the SEC and other regulators.

Despite the GameStop stock scandal, the number of users of the platform's mobile app grew by 6 million in the first two months of 2021.

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