Robinhood Settles FINRA Probes for $29.75M

Online trading platform Robinhood has agreed to pay $29.75 million to settle multiple Financial Industry Regulatory Authority (FINRA) investigations into its supervision and compliance practices.

vThe settlement includes a $26 million civil fine and $3.75 million in restitution to affected customers, according to FINRA’s March 7 announcement. The regulator found that Robinhood failed to address red flags of potential misconduct, leading to Anti-Money Laundering (AML) and supervisory violations.

Supervisory Failures and Compliance Breaches

FINRA determined that Robinhood Financial failed to properly oversee its clearing system, despite noticeable processing delays between March 2020 and January 2021—the same period when Robinhood restricted trading in meme stocks like GameStop (GME) and AMC Entertainment Holdings (AMC).

Additionally, Robinhood Financial and Robinhood Securities were found to have:

🔹 Failed to detect and report manipulative trading activity
🔹 Neglected to investigate suspicious transactions
🔹 Overlooked instances of customer accounts being hacked
🔹 Opened thousands of accounts without proper identity verification

The regulator concluded that Robinhood lacked a reasonable AML program, further compromising customer protection and market integrity.

Misleading Social Media Communications

Robinhood also came under scrutiny for failing to properly monitor promotional content from paid social media influencers.

“Some of these communications included statements that were promissory or not fair and balanced, and thus misleading to investors,” FINRA noted.

As part of the settlement, Robinhood Financial will pay $3.75 million in restitution for providing customers with inaccurate or incomplete disclosures—particularly related to collaring market orders, which converted them into limit orders.

Both Robinhood Financial and Robinhood Securities accepted FINRA’s findings, but neither admitted nor denied the charges.

Robinhood’s Growing List of Regulatory Settlements

This latest FINRA settlement comes just two months after Robinhood reached a $45 million agreement with the U.S. Securities and Exchange Commission (SEC) on January 13. That investigation accused Robinhood of violating more than 10 securities law provisions, including failing to maintain and preserve electronic communications between 2020 and 2021.

Robinhood Reports Record Profits Despite Scrutiny

Despite ongoing regulatory challenges, Robinhood reported a record $916 million net income and over $1 billion in revenue for Q4 2024.

🚀 Crypto revenue surged to $358 million, making up a significant portion of its $672 million in transaction-based revenue—a 200% year-over-year increase.
📈 Crypto trading volume skyrocketed 450% year-over-year, reaching $71 billion.

While regulatory hurdles continue, Robinhood’s growing crypto business appears to be driving strong financial performance.