Specifically, the regulator said Robinhood did not disclose the “receipt of payments from commercial companies to route customer orders to them, and by failing to fulfill its duty to seek the best reasonably available conditions to execute customer orders. “.
The SEC said Robinhood benefited from conducting transactions at prices that were less than optimal for its customers. Taken together, these commissions deprived customers of $ 34.1 million, even after taking into account the savings from transactions without commissions.
“Robinhood provided misleading information to customers about the actual costs of choosing to negotiate with the company,” said Stephanie Avakian, director of the SEC’s enforcement division. “Brokerage firms cannot mislead customers about the quality of order execution.”
Robinhood resolved the case without admitting guilt and said it has changed the practices cited in the complaint. The company claims to have significantly improved its practices and said it has established relationships with additional market makers to ensure the best possible deals for its customers.
“The agreement relates to historical practices that today do not reflect Robinhood. We recognize the responsibility of helping millions of investors make their first investments and we are committed to continuing to evolve Robinhood as we grow to meet the needs of our customers. “Said Dan Gallagher, Robinhood ‘s legal director.
But the fast-growing fair has been criticized by other practices this year.
Robinhood said he disagrees with the state’s allegations and plans to defend himself “vigorously.” The firm said it has improved its business options, added more guarantees and improved educational materials.
“Millions of people have made their first investments through Robinhood, and we remain focused on continuously serving them,” the company said in response to the Massachusetts complaint. “Robinhood is a self-directed broker-dealer and we don’t make investment recommendations.”