News Exchange

Robinhood sentenced by FINRA to pay a $ 70 million fine

For the platform still problems in terms of image

A real blow, the one that was inflicted on Robinhood. It was the American private regulatory organization that struck the blow Financial industry regulatory authority (FINRA), which has ordered the trading platform to pay one financial penalty of 70 million dollars. A sanction that constitutes a real record, justified by the "significant damage" that Robinhood has caused to its customers. Damage resulting from false or misleading information relating to system outages that occurred in March 2020.

Robinhood - FINRA sentenced Robinhood to pay a $ 70 million fine

Robinhood: What Happened?

The story in question has seen in practice the platform authorizing its customers to invest in options even at times when it was not advisable to do so. A modus operandi that was immediately criticized by many and which is now adequately sanctioned by FINRA.
It was Jessica Hopper, executive vice president and head of the organization's enforcement department to say that such a hefty fine should be interpreted as a real warning. In practice, all FINRA member companies, regardless of their size or business model, must comply with the rules governing the brokerage sector. A series of rules which, moreover, have been put in place with the specific intent of protecting investors. Also remembering that their respect is not negotiable and, above all, it cannot be sacrificed in the name of innovation or the will to break everything to create something new later on.

What is FINRA

The Financial Industry Regulatory Authority is a non-profit organization which has been delegated the task of providing a framework of certain rules within which brokerage firms must operate. Supervised by Securities and Exchange Commission of the United States, FINRA focuses its efforts on investor protection and market integrity. In other words, on two aspects that took on extremely significant importance at the beginning of the year. And precisely in relation to Robinhood's extremely questionable moves, during the pump and dump of WallStreetBets redditors on GameStop shares. The platform, in fact, decided on that occasion to suspend transactions, preventing its users from facilitating events and sinking the hedge funds that had implemented the usual mechanism of short selling. Incidentally, one of those involved in the operations is also Robinhood's biggest lender.

Robinhood: What Could Happen Now?

Robinhood, the fine received by FINRA is a very heavy blow not only for the entity, but also in terms of image. The platform, in fact, intends to be listed on Wall Street, by means of a IPO (Initial Public Offering). Which, however, to date, risks turning into a real failure. While it is true that many young people see the app as a perfect tool for their trading, the behaviors implemented by the management have made its public image very opaque. Which had already been significantly damaged by the suicide by an investor last year. Alexander E. Kearns, a twenty-year-old student of the University of Nebraska, had in fact decided to take his own life due to a technical error following which his account was a loss of $ 730. A fact that Robinhood had promised to take into account in order to improve. It does not appear to be so at the moment.

Buying Cryptocurrencies? Exchange Binance Binance

Dario Marchetti

I have a degree in Literature and Philosophy from the Sapienza University of Rome, with a thesis on the eastern border of Italy at the end of the First World War. I have collaborated with several sites on many issues and led the work group that published the official CD-Rom of the SS Lazio "History of a love" and "Photographic History of Magical Rome".

Similar posts

Leave a comment

Your e-mail address won't be published. Required fields are marked *

Back to top button