Robinhood Markets Inc. is in talks to pay a fine to resolve investigations into its options trading practices and disruptions to the stock trading application in March 2020, according to a securities filing.
The Securities and Exchange Commission, state regulatory authorities, and the Financial Industry Regulatory Authority, Wall Street’s self-regulatory arm, are examining Robinhood’s conduct in those matters, including how Robinhood “displays cash and purchasing power to clients and their option trading approval processes. ” the company said in the presentation.
Meanwhile, New York’s financial regulator and attorney general, among other regulators, are investigating cases of unauthorized actors taking over the accounts of Robinhood users.
Two subsidiaries, Robinhood Financial and Robinhood Securities, are currently negotiating a settlement with Finra on outages and options trading practices, which could include charges for violations of Finra’s rules, a fine, customer restitution and contracting of a compliance consultant.
The investigations could result in losses of at least $ 26.6 million, according to the filing.
Robinhood has been criticized for how he handles client options trading. Alex Kearns, a 20-year-old student, committed suicide last summer after thinking he had racked up big losses trading options at Robinhood.
Her family recently filed a wrongful death lawsuit against Robinhood, accusing her of contributing to the death of Mr. Kearns through “misleading communications” about her investments and “virtually non-existent” customer service. They look for unspecified damages.
Write to Peter Rudegeair at [email protected]
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