Stock trading company Robinhood is currently in the red after fined by FINRA $70 million for misleading customers.
The Financial Industry Regulatory Authority (FINRA) announced the fine last week Wednesday.
Apparently, this $70 million fine will be used to settle charges over issues identified with the company’s stock trading service, as reported by The Verge. This fine is currently the highest in FINRA’s history.
According to FINRA, Robinhood has provided false and misleading information from time to time; such as displaying inaccurate information on its trading app on how much cash was in the customer’s account.
The regulatory body, FINRA claimed the trading app company neglected its duty to supervise trades, observe its technology; and ultimately failed to protect its own customers.
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Robinhood has agreed to pay the $70 million fine, the company mentioned in a statement that “We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all.”
The Stock trading company also in a company blog post published on the same day they were fined mentioned that it is expanding its customer support team, planning on offering “enhanced in-app educational resources.”
Displaying inaccurate information on the Robinhood trading app was an offense, the FINRA made reference to. The death of Alex Kearns who committed suicide after seeing an incorrect negative $730,000 balance in his account after unintentional margin trades.
Reports mentioned Alex Kearns contacting Robinhood’s customer support team for clarifications; but there was no concrete reply from after which he died by suicide.
For this sole act and others, FINRA is prompting Robinhood to pay a $57 million fine and $12.6 million in compensation to affected customers. Robinhood was also sued following Alex Kearns death and paid an undisclosed fee.
All of this will be bad news for Robinhood as the stock Trading company has plains to go public; it’s initial public offering (IPO) would happen soon. Only time would tell if this hurts their valuation and stock price.
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