Robinhood to pay around $70 million as a penalty to FINRA

The Financial Industry Regulatory Authority said on Wednesday, that, Robinhood has to pay around $70 million as a penalty for its systemwide outages and misleading communication and trading practices. The settlement is regarding the technical failures that Robinhood experienced in March of 2020.

The stock market was diving that month in especially wild trading amid the outbreak of the COVID-19 pandemic. Robinhood’s lack of due diligence before approving customers to place options trades and purveying misleading information to customers about aspects like trading on margin led to a lawsuit against them.

“FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so,” FINRA said in a statement.