Robinhood Agrees to $29.75 Million FINRA Settlement for Historical Compliance Failures

WealthManagement March 10, 2025

 Robinhood Financial and Robinhood Securities, subsidiaries of Robinhood Markets Inc., have agreed to pay a combined $29.75 million in fines and restitution to settle regulatory violations identified by the Financial Industry Regulatory Authority (FINRA). The settlement addresses various compliance failures, some dating back to the company's early years since its founding in 2013.

According to a detailed 127-page report issued by FINRA, Robinhood Financial will pay $3.75 million in restitution directly to affected customers due to issues related to improper handling of market orders, a practice known as "collaring." In these cases, Robinhood allegedly canceled market orders originally placed at favorable prices, subsequently re-entering them at less favorable terms, disadvantaging customers.

Additionally, Robinhood Financial and Robinhood Securities will collectively pay $26 million to FINRA as penalties for broader compliance violations, including inadequate market order practices, insufficient oversight of trading information, and failure to properly implement anti-money laundering measures. Specifically, FINRA cited Robinhood's alleged practice of not adequately establishing mechanisms to monitor and enforce accurate securities trading information, customer protection, and regulatory compliance.

Robinhood agreed to the settlement without admitting or denying FINRA’s findings. Erica Crosland, Robinhood’s associate general counsel, commented on the settlement, noting: “We are pleased to resolve these historical issues, many dating back to 2014. Robinhood Securities and Robinhood Financial have proactively addressed these matters, strengthening our compliance and regulatory oversight.”

This settlement follows previous regulatory scrutiny of Robinhood, including a $70 million settlement in 2021 related to misleading customer information and inappropriate options trading permissions. Despite past controversies, Robinhood has reported robust financial performance, recently announcing a revenue surge to $1.01 billion in Q4 of 2024.

Robinhood also continues to expand its market position, reflecting investor confidence. Last week, it announced the completion of strategic enhancements aimed at compliance improvements and risk mitigation, aligning with its mission to democratize investing responsibly.