Robinhood Markets (HOOD, Financial) is facing heat again, with its stock tumbling 13% Monday morning after agreeing to pay $29.8 million in fines to Finra. The regulator flagged issues with Robinhood's clearing technology system and anti-money laundering (AML) programs, accusing the company of falling short on key compliance measures.
One major issue? Finra says Robinhood misled customers by not fully explaining how it converted market orders into limit orders through a practice called "collaring". The company also allegedly failed to monitor suspicious trading activity, fraudulent money transfers, and account takeovers.
Beyond that, Finra found that Robinhood didn't properly supervise its clearing system, even after processing delays piled up as trading volume surged.Robinhood agreed to pay $26 million in fines and $3.75 million in restitution to affected customers.
Adding to the scrutiny, the order released Friday criticized Robinhood (HOOD, Financial) for allowing paid social media influencers to promote its platform with misleading claims. However, Robinhood dodged another regulatory bullet, the SEC recently closed its crypto investigation without taking action.
