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Trading App Faces Massive Fines from FINRA and SEC

Jul 01, 2021

Periodically, we at Charles Stephen believe it is important to alert our clients to news in the financial industry that will help you make more informed decisions regarding your financial future.

Yesterday, June 30, 2021, the trading app Robinhood was fined $70 million by the Financial Industry Regulatory Authority (FINRA), the largest penalty ever levied in FINRA’s history. FINRA has accused Robinhood of repeated misleading statements and omissions in customer communications, including inaccurate account balances and whether customers were in positions to make risky option and margin trades. As part of the fine, Robinhood will pay $13 million directly to its users.

This latest penalty comes on the heels of a $65 million settlement the app made with the Securities and Exchange Commission (SEC) in December of 2020 to avoid similar charges of misleading and inaccurate customer communications.

These massive penalties reinforce a key value we hold dear at Charles Stephen: that responsible securities trading requires licensed professionals who take their fiduciary duty to their clients seriously.

Here are just a few links to articles where you can read more about this important story:

The Wall Street Journal

Business Insider

The New York Times

CNBC