Robinhood’s in Hot Water for Covering Up Short Sales And Reporting Corrupt Trade Data

Remember that kid from high school? The good-looking one with straight A’s, full-ride scholarships to Ivy League schools, and a future so perfect it made your mom ask why you couldn’t be more like them? Yeah, the one who also couldn’t stop dabbling in, let’s say, extracurricular substances (aka crack). That’s Robinhood… the fintech cool kid that became famous during the pandemic but just can’t seem to stay out of trouble.

Back in 2020, Robinhood was “HIM” (as the teenagers say). People were slinging stimulus checks on Tesla shares and GameStop call options like they were on a Carnival cruise with free drinks. But then came the freeze. During the GameStop meme stock frenzy, Robinhood paused trading, blaming “market stability.” But we all know what really happened: They bent the knee to their Wall Street sugar daddies who needed to exit their positions without blowing up. Public trust took a nosedive, and so did Robinhood’s stock post-IPO (remember that Dave Portnoy/Vlad interview?).

Fast forward to 2025, and Robinhood’s been on a tear. The stock is up 262% year-to-date, making it Yahoo Finance’s “comeback stock” of the year. Vlad Tenev is all smiles on Zoom interviews, basking in accolades and dreaming about crypto-friendly deregulation under a possible second Trump administration. But just like that high school kid who shows up to the 10 year reunion with a new Tesla but still “borrows” cash from their grandma and has an ankle monitor, Robinhood has some skeletons rattling in the closet.

The SEC just smacked Robinhood with a $45 million penalty for (get this) violating more than 10 securities laws. Among their greatest hits: failing to report accurate trading data, botching short-sale disclosures, ignoring identity theft protections, and letting hackers swipe millions of customer emails and names in 2021. Oh, and they’ve been messing up trading reports (we’re talking errors in 392 million transactions) for over five years. It truly is hilarious this company’s name is Robinhood.

Of course, the company tried to spin it… “We’re pleased to resolve these matters,” said General Counsel Lucas Moskowitz, claiming most of these issues are “historical.” Sure, Lucas. And I’m historically bad at doing my taxes, but the IRS doesn’t cut me a $45 million deal. Even though they continue to prove they’re corrupt… Robinhood is still growing. Assets under management are up 40% year-over-year, sitting at a $200 billion. But if they ever want to be able to compete with Fidelity ($10 trillion)... here’s a thought: maybe stop screwing over your customers and doing shady sh*t.

So, while Robinhood’s stock might be mooning, the SEC charges remind us of its Achilles' heel: it just can’t stop tripping over its own shady behavior.

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Stock.News has positions in Robinhood and Tesla.