Robinhood, a major US commission-free stock trading and investing app, has reached an agreement to settle $640,000 with Vermont’s financial regulator, DFR, over the platform’s outages and account supervision issues.

The  settlement  includes a penalty of $590,000, and the company will contribute $50,000 to the Vermont Financial Services Education and Victim Restitution Special Fund.

“Robinhood and other fintech platforms have broadened access to financial markets and introduced investing to many for the first time. Yet, at the same time,  fintech  firms must ensure they can service their growing customer base and comply with our regulatory requirements that are designed to protect Vermonters’ hard-earned money. I am pleased that Robinhood has taken significant action over the past couple of years to enhance its oversight and compliance and that we were able to reach a settlement,” Michael S. Pieciak, DFR Commissioner, commented.

Case Background

During a period of historic market volatility, customers were unable to access the company’s website and mobile apps in March 2020. Investment orders could not be entered, modified or cancelled.

In addition, Robinhood did not offer live telephone customer support. As a result, during two of the largest daily point gains and losses in the Dow Jones Industrial Average in history, certain Vermont customers were unable to trade. In response to the outages, at least 40 Vermont customers contacted Robinhood and the Department regarding their inability to trade. Many expressed their extreme frustration with the lack of market access during historic market volatility.

Investing in options and margin trading will require Robinhood to evaluate investors’ suitability more closely and ensure that all approved applicants who had previously been turned down provide accurate information. There are 809 Vermont customers who can trade options, and 581 Vermont customers that can trade margins.

In February, the US Securities and Exchange Commission (SEC) announced that it is going to distribute another $6.55 million to Robinhood investors who suffered losses due to the platform’s non-disclosure practices.

Robinhood, a major US commission-free stock trading and investing app, has reached an agreement to settle $640,000 with Vermont’s financial regulator, DFR, over the platform’s outages and account supervision issues.

The  settlement  includes a penalty of $590,000, and the company will contribute $50,000 to the Vermont Financial Services Education and Victim Restitution Special Fund.

“Robinhood and other fintech platforms have broadened access to financial markets and introduced investing to many for the first time. Yet, at the same time,  fintech  firms must ensure they can service their growing customer base and comply with our regulatory requirements that are designed to protect Vermonters’ hard-earned money. I am pleased that Robinhood has taken significant action over the past couple of years to enhance its oversight and compliance and that we were able to reach a settlement,” Michael S. Pieciak, DFR Commissioner, commented.

Case Background

During a period of historic market volatility, customers were unable to access the company’s website and mobile apps in March 2020. Investment orders could not be entered, modified or cancelled.

In addition, Robinhood did not offer live telephone customer support. As a result, during two of the largest daily point gains and losses in the Dow Jones Industrial Average in history, certain Vermont customers were unable to trade. In response to the outages, at least 40 Vermont customers contacted Robinhood and the Department regarding their inability to trade. Many expressed their extreme frustration with the lack of market access during historic market volatility.

Investing in options and margin trading will require Robinhood to evaluate investors’ suitability more closely and ensure that all approved applicants who had previously been turned down provide accurate information. There are 809 Vermont customers who can trade options, and 581 Vermont customers that can trade margins.

In February, the US Securities and Exchange Commission (SEC) announced that it is going to distribute another $6.55 million to Robinhood investors who suffered losses due to the platform’s non-disclosure practices.