Robinhood Financial Sanctioned
by Texas Securities Regulator
Austin, TX-June 2023
The Texas State Securities Board (TSSB) entered into a Consent Order with Robinhood Financial LLC, a registered broker dealer headquartered in Lake Mary, Florida.
According to the TSSB Consent Order, Robinhood Financial was found to have numerous operational failures, including:
- Failure to have a reasonably designed customer identification program
- Failure to supervise technology critical to providing customers with core broker=dealer services
- Failure to exercise due diligence before approving options accounts
- Failure to report all customer complaints to FINRA
- Negligently misrepresented the risks associated with options spread tranactions
Robinhood acquired over 445,000 new Texas customers from October 1, 2019-March 31, 2020, for a total customer count of 1.2 million Texans as of March 31, 2020. During that time period Robinhood approved nearly 63,000 Texas customers for option trading and nearly 9,000 Texas customers for margin trading, according to the regulator. In March 2020 Robinhood’s mobile and website platform experienced multiple outages preventing customers from being able to trade and resulting in damages.
The TSSB assessed Robinhood Financial an administrative fine of $200,000 and Robinhood agreed to remedial undertakings designed to address the supervisory and operational deficiencies.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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