Legal proceedings and lawsuits have become extremely common. Robinhood, a trading platform decided to stop a lawsuit instead of extending it by deciding to pay the designated fine. The platform had drowned in troubled waters with the Securities and Exchange Commission [SEC] raise the trading application for duping customers and seek additional money from its consumers.
Tiff Robinhood With the SEC
In an elaborate press release, he called and charged the U.S. Securities and Exchange Commission Robinhood Financial LLC with a variety of allegations. This list included submitting “misleading statements and omissions in customer communications” from 2015 all the way up to 2018. This involved false claims on the platform’s FAQ pages where he lied about his revenue sources.
Joseph Sansone, Head of the SEC’s Division of Market Abuse, commented on Robinhood’s activities and said,
“Robinhood failed to seek the best terms reasonably available when executing customer orders, causing customers to lose tens of millions of dollars. Today’s action sends a clear message that the Commission will not allow brokers to ignore their obligations to customers. ”
The SEC further alleged that the trading platform had gone on to defraud individuals by hoarding the “Without a commission”Choosing to trade. While this may seem like an attractive deal to its customers, it was nothing but a honey pot as the trading company charged higher prices for order flow. This was unpleasant for many as other brokers’ prices were relatively less. He read further the statement,
“The order finds that Robinhood provided inferior trade prices which, overall, disenfranchised customers by $ 34.1 million even after considering the savings from non-payment of commission. Robinhood made these false and misleading statements during its rapidly growing time. ”
The trading application was fast enough to try to get out of trouble. Robinhood went on to agree to pay $ 65 million as a civil penalty. The platform abstained from admitting or denying the allegations set by the SEC.
Dan Gallagher, Robinhood’s Chief Legal Officer, claimed that the settlement was about historical practices that do not reflect the platform today. Recognizing the responsibility of helping millions of investors make their first investments, the executive went on to say that the team is committed to continuing to evolve the trading platform as it grows to meet the needs of its customers. He also added,
“We are fully transparent in our communications with customers about our current revenue streams, have significantly improved our best operating processes, and established relationships with additional market makers to improve operating quality”