Vermont Regulator Reaches $640,000 Settlement with Robinhood

　　The Vermont Department of Financial Regulation (DFR) office made the announcement.

　　The settlement includes a $590,000 penalty.

　　The settlement includes a penalty of $590,000, and the company will also contribute $50,000 to the Vermont Financial Services Education and Victim Restitution Special Fund.

　　“Robinhood and other fintech platforms have broadened access to financial markets and introduced investing to many for the first time. Yet, at the same time, fintech firms must ensure they can service their growing customer base and comply with our regulatory requirements that are designed to protect Vermonters hard-earned money. I am pleased that Robinhood has taken significant actions over the past couple of years to enhance its oversight and compliance and that we were able to reach a settlement,” Michael S. Pieciak, DFR Commissioner, commented.

　　Case Background

　　During a period of historic market volatility, customers were unable to access the companys website and mobile apps in March 2020. Investment orders could not be entered, modified, or canceled.

　　In addition, Robinhood did not offer live, telephone customer support. As a result, during two of the largest daily point gains and losses in the Dow Jones Industrial Average in history, certain Vermont customers were unable to trade. In response to the outages, at least 40 Vermont customers contacted Robinhood and the Department regarding their inability to trade. Many expressed their extreme frustration with the lack of market access during historic market volatility.

　　Investing in options and margin trading will require Robinhood to evaluate investors suitability more closely and ensure that all approved applicants who had previously been turned down provide accurate information. There are 809 Vermont customers who can trade options, and 581 Vermont customers can trade margin.

　　In February, the US Securities and Exchange Commission (SEC) announced that it is going to distribute another $6.55 million to Robinhood investors who suffered losses due to the platforms non-disclosure practices.