The Financial Industry Regulatory Authority (FINRA) has imposed a $26 million fine on Robinhood Financial and Robinhood Securities for multiple violations, including failures in anti-money laundering compliance, supervision, and customer disclosures. 

Additionally, Robinhood Financial has been ordered to pay $3.75 million in restitution to customers who suffered financial losses due to the firm's order execution practices.

The regulatory action highlights significant compliance lapses within Robinhood’s operations. According to FINRA’s findings, Robinhood Financial misled customers about its practice of converting market orders into limit orders—a process known as “collaring.” 

As a result, affected customers saw their orders canceled and re-entered at less favorable prices, prompting FINRA to mandate financial restitution.

Beyond misleading disclosures, FINRA found that Robinhood Financial and Robinhood Securities failed to maintain adequate anti-money laundering (AML) programs. 

These deficiencies reportedly led to the firms missing red flags related to manipulative trading, suspicious money transfers, and account takeovers by third-party hackers. 

Additionally, Robinhood Financial lacked a sufficient customer identification program, resulting in the unauthorized opening of thousands of accounts without proper identity verification.

Robinhood Securities also faced scrutiny over its clearing technology system, which experienced processing delays during the January 2021 surge in trading activity. 

FINRA determined that the firm had failed to properly supervise its clearing system, which in turn hindered its ability to meet regulatory obligations.

Further violations involved Robinhood’s supervision of social media communications. The firm allegedly failed to adequately monitor and retain promotional content posted by paid influencers, some of whom made misleading or unbalanced claims about the platform’s services.

Robinhood Securities was also found to have violated reporting requirements related to trade disclosures, including issues with blue sheets—documents that track securities transactions for regulatory review—as well as reporting to FINRA’s trade reporting facilities and the Consolidated Audit Trail.

In its enforcement action, FINRA noted that while some of the violations were self-reported, the firms repeatedly failed to establish and implement reasonable compliance measures. Robinhood Financial and Robinhood Securities consented to FINRA’s findings without admitting or denying the charges. The firms also agreed to certify that they have since remedied the identified deficiencies.

Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA, emphasized the broader industry implications of this action. “Today’s action reminds FINRA members that compliance with core regulatory obligations remains critical to safeguarding and serving all investors,” he said.

As part of its commitment to transparency, FINRA has made details of the enforcement action available through its Disciplinary Actions Online database. The organization also publishes a summary of disciplinary actions against firms and individuals on its Monthly Disciplinary Actions page.