(Reuters) – Popular online broker Robinhood Financial LLC has agreed to pay a $ 65 million fine for settling fees they misled customers, the US Securities and Exchange Commission said on Thursday.
The day before, a Massachusetts securities regulator accused the company of pursuing aggressive tactics to attract inexperienced investors and not prevent disruptions to its trading platform.
The SEC accused the company of not informing customers about payments it received from trading companies to direct customer orders through them, a move that resulted in customers paying higher prices to conduct business.
Between 2015 and the end of 2018, the SEC said that Robinhood made misleading statements and omissions on its website in response to customer questions about its largest source of revenue.
"When describing how it made money … one of Robinhood's outlets to customers was that trading was" commission free ", but largely because it was unusually high payments for order flows, Robinhood customers' orders were executed at prices that were lower than other brokers' prices, the SEC found.
"There are many new companies that want to harness the power of technology to offer alternative ways for people to invest their money," added Erin Schneider, who heads the SEC's regional office in San Francisco.
innovation does not deny liability under federal securities laws. ”
Start-up of financial technology, which has been credited for helping to popularize trading nd millennials, neither admitted nor denied guilt, while agreeing to pay the penalty.
Robinhood also agreed to retain an independent consultant to review its policies and procedures for customer communication, payment for order flow and best execution of customer orders.
"The settlement concerns historical practices that do not reflect Robinhood today," said the company's legal director, Dan Gallagher, in a statement. [1