The Securities and Exchange Commission (SEC) has imposed a $45 million fine on Robinhood for multiple securities law violations between 2018 and 2024.
Violations and Findings
The SEC's investigation uncovered several major compliance failures at Robinhood, with violations spanning multiple regulatory requirements. The most serious breach involved the submission of deficient electronic blue sheets (EBS) to the Commission. Robinhood Securities made at least 11,849 incomplete or inaccurate submissions between October 2018 and April 2024, impacting approximately 392 million transactions.
$45 Million Penalty Reflects Multiple Violations
The $45 million penalty reflects multiple violations across Robinhood's business operations. Robinhood Securities faces the larger share at $33.5 million, with fines broken down into: $7 million for electronic blue sheet submission failures, $15 million for Regulation SHO violations, $6.5 million for anti-money laundering compliance issues, $4 million for recordkeeping violations, and $1 million for customer protection rule breaches. Robinhood Financial is penalized $11.5 million for failing to meet suspicious activity reporting requirements.
SEC Requires Robinhood to Implement Reforms
The SEC's enforcement action requires Robinhood to implement comprehensive reforms across its operations. Within 180 days, the company must conduct an internal audit of its supervisory and compliance procedures, particularly focusing on electronic communications and recordkeeping practices. The audit must evaluate the company’s surveillance programs, technological solutions, and employee training protocols.
The SEC's actions highlight broader regulatory scrutiny over digital-first brokerages and their compliance infrastructure. The penalty levels and mandates for Robinhood serve as a sign for other fintech companies regarding regulatory expectations.
