Published , by Donovan Erskine
Published , by Donovan Erskine
Robinhood is one of the most popular means of trading stocks and cryptocurrencies, particularly in regards to “retail investors.” However, Robinhood came under heavy scrutiny earlier this year, when the infamous GameStop (GME) short squeeze happened. Users flocked to GameStop’s (GME) stock, trying to buy up as many shares as they could. Robinhood began to limit and outright restrict users’ ability to buy GME during this time, bringing up several ethical and business concerns. Now, Robinhood will have to pay a hefty price for its behavior, as FINRA is ordering the company to pay a $70 million financial penalty.
The Financial Industry Regulatory Authority revealed the financial penalties it was taking against Robinhood in a news release posted to its official website. The organization details Robinhood’s “systemic supervisory failures” and how they directly led to substantial harm to a number of its users. Most of this is in reference to the company’s handling of the GameStop (GME) short squeeze earlier this year.
Robinhood has been ordered to pay $12.6 million in restitution back to harmed users, as well as a $57 million fine. It’s a hefty price to pay for what was quite frankly a disastrous response to the wild stock market action that has taken place this year. For a look back at all of the trouble the company has found itself in, take a stroll down the Robinhood topic page on Shacknews.