Cryptocurrency and stock trading app Robinhood has agreed to pay a $7.5 million penalty and overhaul its digital practices to settle an enforcement action first brought by Massachusetts’ securities regulator William Galvin in December 2020.
Galvin claimed Robinhood marketed itself like a game, targeting inexperienced investors. The settlement ends a nearly 3-year legal battle between the trading platform and Massachusetts.Â
In addition to the “gamification” allegations, Robinhood must address “serious cybersecurity issues” and add disclosures about digital engagement practices still in use. The firm must also bring on an independent compliance consultant.
Robinhood said it rejects the premise its app was “gamified” and has taken steps to improve cybersecurity since 2021. The company said the settlement resolves historical matters that don’t reflect Robinhood today.
This settlement follows other regulatory actions against Robinhood. In 2021, FINRA fined the company $70 million for harming thousands of users. In April 2023, Robinhood paid $10 million to settle allegations it failed clients through multiple outages.
The Massachusetts settlement ensures Robinhood will stop using celebratory images tied to trading frequency and push notifications highlighting lists that mimic games of chance.
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