Robinhood Pays $65 Million in Settlement with SEC
Robinhood logo

Robinhood Pays $65 Million in Settlement with SEC

With the increasingly-popular FinTech app Robinhood allowing customers to buy and sell stocks without fees, how does the company make money? That question was at the heart of a Security and Exchange Commission complaint. As the New York Times reports, Robinhood has now agreed to pay a $65 million fine to settle charges brought by the SEC. However, in doing so, the startup did not admit to any wrongdoing.

The SEC accuses Robinhood of misleading customers about their policies and trade platform. Specifically, they say that it was not made clear to users that Robinhood profited from selling its customers’ trades to other firms to be executed, in a process known as payment-for-order-flow. In turn, it also suggests that Robinhood users ended up with disadvantageous trade pricing, with these losses reportedly totaling $34 million.

It’s important to note that the SEC’s complaint is in regards to Robinhood’s operations between 2015 and 2018. This was referenced in a statement from Robinhood’s Chief Legal Officer Dan Gallagher who said, “The settlement relates to historical practices that do not reflect Robinhood today. We recognize the responsibility that comes with having helped millions of investors make their first investments, and we’re committed to continuing to evolve Robinhood as we grow to meet our customers’ needs.”

These complaints aren’t the first time that Robinhood has faced criticism this year. Over the summer, the startup faced some tough questions following the tragic death of a 20-year-old trader who mistakenly believed he owed more than $700,000 due to the way his portfolio balance displayed in the app. This event later led Robinhood to announce a number of adjustments to their options trading platform including an expansion of their educational resources. Elsewhere, the company has also faced heat from customers due to multiple instances of downtime the app has endured in recent months.

Despite these setbacks, Robinhood has continued to raise tremendous amounts of money of venture capital firms. So far this year, the FinTech has seen more than $800 million in investments between a $600 million Series F ($280 million of which was announced in May, with the remaining $320 million tacked on in July) and a $200 million Series G. Of course, these funds came as the platform saw a surge of new users come aboard during what proved to be a volatile year for the markets.

Overall, while this settlement is sure to garner a few headlines, it seems as though it will only prove to be a small bump in the road for Robinhood. Although the company has taken a few lumps in the past couple of years, it’s also managed to completely change the brokerage landscape and brought a new generation of investors into the fold. Therefore, it probably wouldn’t be wise to count Robinhood out anytime soon.

Leave a Reply

The "Email" field is empty, you must enter some text to proceed.The text you entered in the "Email" field appears to be invalid, please edit it and try again
Get the Latest News Delivered to Your Inbox

A Guide to Building Credit and Increasing Your Credit Scores

When it comes to credit, there’s some good news. The average credit score in the United States has been steadily rising in recent years, coming in at 715 in 2023. That may be because, today, consumers not only have more ways to access their credit reports and scores than ever before but also because there are an increasing number of options that Americans have for building credit in the first...

2024 SoFi Checking and Savings Review

Ever since I started taking an interest in the FinTech sector, one company whose name I’ve seen pop up over and over again is SoFi. Lately it seems as though that theme has been sent into overdrive as the company has not only become a household name thanks to its stadium naming rights deal but also because of the company’s continued product expansions. The most interesting development in my mind...
Brim logo

Brim Financial Raises $85 Million as It Eyes Global Expansion

Toronto-based FinTech infrastructure startup Brim Financial has announced a new funding round. About the round: Brim has revealed an $85 million round. The Series C was led by EDC Investments while new investor Vistara Growth and returning investors White Owl Group, Epic Ventures, and Zions Bank also participated. To date, the company has now raised $110 million including a Series B in 2021. According to Brim, the latest funding will...
Chase Freedom Flex card

Chase Reveals Q2 2024 Freedom 5%(+) Bonus Categories

Chase has announced its bonus category picks for the second quarter of 2024 — including some interesting twists. About the categories: As April approaches, Chase has revealed what categories Freedom and Freedom Flex cardholders can earn bonuses on. From April 1st through June 30th, customers can earn 5% (or more) in three categories:, Hotels, and Restaurants. Similar to how Chase embraced a "New Year, New Me" theme last quarter,...
Rent Day

Bilt Announces Home Collection Deal for May 2024 Rent Day

For May's Rent Day, Bilt is offering a deal that will allow members to decrease their rent bill while also adding to their home decor. About the Home Collection offer: Bilt has crafted a unique Rent Day offer for May 2024. Through the 1st, when Bilt members redeem their points toward rent payments, they'll receive the same number of points to be used toward Bilt Home Collection items. To take...