Robinhood Securities will pay $33.5 million as part of the settlement, while Robinhood Financial will pay $11.5 million. The firms have also agreed to conduct internal audits and address the regulatory deficiencies identified in the SEC’s order.

“Today’s order finds that two Robinhood firms failed to observe a broad array of significant regulatory requirements, including failing to accurately report trading activity, comply with short sale rules, submit timely suspicious activity reports, maintain books and records, and safeguard customer information,” said Wadhwa.

Robinhood, founded in 2013, has a history of big-ticket regulatory penalties. In 2020, Robinhood Financial paid $65 million to settle SEC allegations that it didn’t sufficiently disclose its business dealings with high-speed traders. In 2021, the same unit paid nearly $70 million to the Financial Industry Regulatory Authority, the brokerage industry’s self-regulator. 

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Both Robinhood broker-dealer’s violations include the following conduct, from 2019 to 2022:

• Suspicious activity reporting: Failure to timely investigate suspicious transactions, resulting in systematic failures to timely file suspicious activity reports.
• Identity theft protection: Failure to implement adequate policies and procedures designed to protect their customers from the risk of identity theft.
• Unauthorized access: Failure to adequately address cybersecurity risks related to remote access to their systems, after a third party obtained unauthorized access and downloaded information related to millions of individuals who had provided that information to Robinhood.
• Off-channel communications: Longstanding failures to maintain and preserve electronic communications in violation of the recordkeeping provisions of the federal securities laws.