The US Securities and Exchange Commission (SEC) fined Robinhood $ 65 million. Thus the company has settled claims that it is misleading customers about the sources of revenue and does not provide the best conditions for fulfilling customer orders as promised.
Robinhood makes money by selling its bidsclients, redirecting them to the financial intermediaries who will pay for them. In addition, the service receives money for paid subscriptions, stock credits, and commissions for using a debit card.
According to the SEC, the company made statementswhich misled customers. One of the benefits of Robinhood to clients was zero commission. At the same time, the service was silent that it took a commission from the intermediaries to whom it sent clients' requests. This practice is called “pay-per-application”.
Because of this, customer orders were carried out at less thanfavorable prices than other brokers. Regardless, Robinhood has falsely claimed in its FAQ section that the quality of its services matches or exceeds the competition. According to the SEC, as a result, users of the service lost about $ 34.1 million.
The SEC believes that Robinhood misinformed customers about the sources of its revenue from 2015 to 2018.
Robinhood agreed to pay the fine, but neither admitted nor denied the guilt. The service will also hire an independent consultant to check all the company's operations and their compliance with the law.</p></p>