The California Department of Financial Protection and Innovation (DFPI) announced that it has joined a multi-state settlement with Robinhood Financial LLC, which will pay up to $10.2 million in penalties for operational and technical failures that harmed main street investors.

NASAA investigated Robinhood's operational failures in the retail market, led by state securities regulators from Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas. The investigation was triggered by platform outages in March 2020 and issues prior to March 2021, including deficiencies in options and margin accounts approval, weak monitoring and reporting tools, and inadequate customer service, causing users to face difficulties in processing trades during stock value fluctuations.

The order sets out the following violations:

Robinhood neither admits nor denies the findings as set out in the States’ orders.

“Today’s multistate agreement represents states at their best – working together for the benefit of Main Street investors,” said NASAA President Andrew Hartnett. “Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies.”
“Online trading platforms provide Americans with convenient options to invest. But platforms such as Robinhood must comply with common-sense protections for investors and consumers as required by law,” said DFPI Commissioner Clothilde Hewlett. “Today’s agreement reflects the ongoing efforts by state securities regulators to protect investors and make sure that they are treated fairly by financial services firms.”