Robinhood values FINRA settlement at $26.6 million
The crypto-friendly platform Robinhood is in talks with a number of regulators regarding a potential settlement of claims against them. The statement was made in a filing to the U.S. Securities and Exchange Commission (SEC).
According to the document, the company is cooperating with the Financial Industry Regulatory Authority (FINRA), the SEC and the New York Attorney General.
Robinhood plans to settle with FINRA “some issues, including outages in March 2020 and the options trading.” The company projected that any fines and penalties could total at least $26.6 million.
“However, we cannot predict whether these negotiations will lead to a resolution of the issues.”
In early March 2020 the Robinhood app was unavailable for about 17 hours amid high user activity during a short-term market rebound after its drop. The second outage occurred a few days later.
In February 2021 a US couple criticized Robinhood’s options trading policy and accused the company of driving their son to suicide. A trader died after receiving a notification of a negative balance of $730,000.
The platform did not inform the user that there were options on his account that more than covered the liabilities. Later it lifted the restrictions.
Earlier, Robinhood drew the attention of US authorities by suspending trading of some assets amid the GameStop stock pump.
On February 18, co-founder and chief executive Vlad Tenev apologised for the temporary ban at a hearing before the House Financial Services Committee. He also rejected any collusion with hedge fund Melvin Capital and market maker Citadel.
According to Reuters, the incident is being reviewed by the SEC and other regulators.
Despite the GameStop saga, in the first two months of 2021 the number of users of the platform’s mobile app rose by 6 million.
Bloomberg sources reported that Robinhood planned to file for an initial public offering.
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