Robinhood Faces $45 Million SEC Penalty for Securities Law Violations

In a significant regulatory action on January 14th, the U.S. Securities and Exchange Commission (SEC) announced that Robinhood Securities LLC and Robinhood Financial LLC will collectively pay $45 million in civil penalties due to infractions of over ten securities laws. The infractions include a failure to report suspicious activities in a timely manner, inadequate identity theft protection protocols, and neglect in addressing cybersecurity vulnerabilities. Additionally, the firms did not maintain essential customer communication records. Robinhood Securities also faced charges for insufficient reporting of securities trading data and non-compliance with the Regulation SHO mandate. The infractions mainly occurred between 2019 and 2023, highlighting ongoing compliance concerns. The SEC reported that both companies have acknowledged certain findings from the investigation, leading to the agreed-upon financial penalties, reflecting a broader effort to enforce adherence to securities regulations.