Robinhood Gets Rekt with $26 Million Fine for Shafting Helpless Retail Users—Shocker…

At this point, Robinhood paying regulatory fines is about as shocking as a politician getting caught lying. The so-called champion of retail investors just agreed to fork over $26 million to FINRA to settle allegations that it ignored red flags, failed to verify customer identities, and generally ran its compliance department like a joke.

(Source: Giphy) 

And, in classic Robinhood fashion, they didn’t admit to or deny any wrongdoing—because why take responsibility when you can just cut a check and move on? However, while $26 million may not seem all that bad, you can’t look away from the pattern of F’ups Robinhood has single-handedly initiated over the years. 

For instance, in January of last year, the Hood paid $45 million to the SEC for failing to preserve records and not reporting suspicious activity on time. In 2021, as we all know, FINRA fined them $70 million for misleading customers about margin trading and completely botching their systems during high-volume trading days. Oh and in 2020, the SEC made them cough up $65 million for completely shafting their loyal retail trading customers selling customer orders to high-frequency traders without properly disclosing it. 

(Source: Bloomberg) 

Add that all up, and Robinhood has racked up nearly $200 million in fines in just a few years. Which is why I say, at this point, it’s not even punishment for them—it’s just the cost of doing business, baby. So with that, who did Robinhood screw this time? Well according to FINRA, Robinhood was up to its usual degeneracy. For more context, the CVS receipt looks like this: 

Robinhood ignored sketchy customer activity—because actually enforcing anti-money laundering rules is too much work. Let social media influencers pump up their platform with no oversight—all while misleading users about “collaring” trades—which blocked customers from buying or selling stocks if prices moved too much between placing and executing a trade. Naturally, this led to some users getting rekt with worse prices, and Robinhood conveniently forgot to disclose how bad these customers were getting bent over. Not to mention there’s also the $3.75 million in restitution they have to pay back to customers who got shafted. 

(Source: Reuters) 

The problem with all this? Investors don’t seem to care at all. In fact, despite all the backlash, Robinhood has soared 163.46% over the last year. Meaning, as long as Robinhood keeps making bank on options trading, crypto trading, and selling order flow, they can afford to throw millions at regulators every few months and still be mooning. 

Bottom line? It’s clear that Robinhood has perfected the Deny, Settle, Repeat strategy. They get caught, pay up, and move on. And why wouldn’t they? The business keeps growing, retail traders keep using the platform, and regulators clearly don’t have the balls to shut them down. 

(Source: Giphy) 

So until someone forces them to actually change (and get sugar daddy Ken Griffin out of the picture) expect more of the same. Robinhood will keep doing its thing, regulators will keep handing out meaningless fines, and investors will still keep looking the other way. Especially when that other way continues to be more gains.

For now, keep your eyes on Robinhood to see if any volatility hits the stock when we resume trading tomorrow, but if the past is any indication—I wouldn’t hold my breath. Meaning, do your due diligence and place your bets accordingly, friends. As always, stay safe and stay frosty! Until next time… 

P.S. $1.4 million, $1.02 million, $6.715 million and $25.3 million—these aren’t lottery winnings or Miami real estate prices… they’re all insider transactions that have gone down in the last week while retail investors were busy panic-selling everything. Want to track these corporate fat cats in real-time so you can pretend you're also an executive with material nonpublic information? (Legally, of course.) Click here to join Stocks.News premium while you still can…

Stocks.News holds positions in Robinhood as mentioned in the article.