Vlad Tenev, CEO of Robinhood
Photo:
Us House Tv Via Cnp / Zuma Press
Robinhood Markets Inc. is in talks to pay a fine for resolving investigations into its options trading practices and the interruptions in the stock trading application it suffered in March 2020, according to a securities dossier.
The Securities and Exchange Commission, state regulators and the Financial Industry Regulatory Authority, Wall Street’s self-regulatory arm, are examining Robinhood’s conduct on these matters, including how Robinhood “shows cash and power of buying to customers and their options trading approval processes, ”the company said in the presentation.
Aside from that, the New York-based financial regulator and attorney general, among other regulators, are studying cases of unauthorized actors taking over from Robinhood users.
Two subsidiaries, Robinhood Financial and Robinhood Securities, are currently negotiating an agreement with Finra for interruptions and options trading practices, which could include charges for violating Finra rules, fines, restitution to customers and hiring a compliance consultant.
Investigations could result in losses of at least $ 26.6 million.
Robinhood has been negotiated for the way it manages client options trading. Alex Kearns, a 20-year-old student, committed suicide last summer after thinking he had amassed large losses of options trading in Robinhood.
Her family recently filed a death warrant for injustice against Robinhood, accusing her of contributing to Kearns’ death through “misleading communications” about her investments and “virtually non-existent” customer service. They seek unspecified damages.
Executives from Robinhood and other companies testified before Congress Thursday after the January trade frenzy involving GameStop and other securities that raised concerns about the integrity of the U.S. stock market and the rules that govern it. Photographic illustration: Ang Li (originally published on February 18, 2021)
Write to Peter Rudegeair to [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8