Saturday, February 27, 2021
Violations of trade rules
Robinhood seeks comparison with authorities
Robinhood has not only come under criticism since the course capers at Gamestop. The online broker is charged with numerous violations of trading regulations. The company now wants to settle allegations by some US authorities.
The securities broker Robinhood, which has come under criticism due to the recent turbulence on the US stock exchange, is negotiating a settlement with US supervisors because of various previous violations of the rules. Robinhood expects costs of at least 26.6 million dollars, around 22.0 million euros, according to a press release. It is about possible violations of regulations when trading stock options and failures of the Robinhood app in March 2020.
The amount relates to negotiations with the financial regulator Finra, but other US authorities have Robinhood on their knees as well. In its annual report, the group lists investigations by the Securities and Exchange Commission as well as the Attorney General's Office and the Financial Supervisory Authority in New York into a hacker attack on user data. In Massachusetts, supervisors accuse Robinhood of violating financial market laws in the state through unfair marketing.
Anyway, the company is in a lot of legal trouble. Class actions are also run by users who were prevented from trading securities due to technical breakdowns or who accuse the broker of errors in order execution. In addition, around 2000 customers sued whose accounts were allegedly hijacked in the hacker attack. Other class actions against Robinhood revolve around violations of fiduciary contractual obligations to the disadvantage of users.
There is also an explosive legal dispute with the family of a customer who committed suicide in June 2020 at the age of 20 under the – false – assumption that he suffered enormous losses while trading stock options. All of these cases are independent of the recent controversy surrounding trading restrictions on the overheated stocks of some US companies, such as video game retailer Gamestop, which have already led to new investigations and class actions.
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