Robinhood has reached a settlement with the U.S. Securities and Exchange Commission (SEC) after being accused of over ten violations of securities laws. The total fine amounted to $45 million.
Long-Term Misconduct by Robinhood
The SEC's report revealed that two divisions of the company, Robinhood Securities LLC and Robinhood Financial LLC, violated securities laws between 2018 and April 2024. Key issues included failing to report suspicious activities, insufficient protection of customer data, and inadequate measures against identity theft.
Robinhood acknowledged some of the SEC’s findings and agreed to the following penalties:
Robinhood Securities LLC to pay $33.5 millionRobinhood Financial LLC to pay $11.5 million
Key Violations and Cybersecurity Weaknesses
The SEC highlighted several critical failures, including:
Anti-money laundering lapses: From January 2020 to March 2022, Robinhood failed to report suspicious activities, violating anti-money laundering laws.Identity theft protection: Between April 2019 and July 2022, Robinhood did not implement adequate measures to prevent identity theft, exposing customers to greater fraud risks.Cybersecurity vulnerabilities: In 2021, the company ignored known threats, allowing unauthorized access to sensitive data of millions of users.
Securities Law Breaches
The SEC also found that Robinhood failed to comply with record-keeping and off-channel communication regulations between 2020 and 2021. From 2019 to 2023, the company violated short-sale regulations in its fractional trading and stock lending programs.
Another significant issue was the inaccurate reporting of over 11,800 electronic blue sheets (EBS), resulting in erroneous reporting of approximately 392 million transactions over five years.
SEC's Statement
Sanjay Wadhwa, Acting Director of the SEC's Enforcement Division, emphasized that brokerage firms must comply with laws to maintain market integrity. He stressed the importance of adhering to regulations that protect investors and ensure fairness in financial markets.
Robinhood's Crypto Division Still Under Scrutiny
Although Robinhood’s cryptocurrency activities were not part of this settlement, the company remains under SEC scrutiny. In 2023, Robinhood received a Wells notice, indicating potential SEC actions regarding its cryptocurrency listings, custody practices, and platform operations.
Meanwhile, the SEC continues its civil enforcement actions against other major crypto companies, including Binance, Coinbase, and Ripple Labs.

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