Robinhood agreed to pay a $65 million civil penalty, without admitting or denying SEC’s findings.
The Securities and Exchange Commission on Thursday charged Robinhood with deceiving customers about how the stock trading app makes money and failing to deliver the promised best execution of trades. Robinhood agreed to pay a $65 million civil penalty, without admitting or denying SEC’s findings. The Silicon Valley startup, which has eventual plans to go public, has raised north of $1 billion in funding in 2020, lifting Robinhood’s valuation to $11.7 billion. « Between 2015 and late 2018, Robinhood made misleading statements and omissions in customer communications, including in FAQ pages on its website, about its largest revenue source when describing how it made money – namely, payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution, also known as ‘payment for order flow,' » the SEC statement read. « One of Robinhood’s selling points to customers was that trading was ‘commission free,’ but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices, » the statement went on to say.
