By Hannah Lang and Manya Saini
(Reuters) -Robinhood Financial LLC will pay up to $10.2 million in penalties to several states related to platform outages the company experienced in March 2020 and deficiencies in the brokerage's review and approval process prior to 2021.
The settlement comes after an investigation by state securities regulators in Alabama, Colorado, California, Delaware, New Jersey, South Dakota and Texas into outages on Robinhood (NASDAQ:HOOD)'s app that shut customers out of trading on pandemic-related volatility, several states said in a release. Robinhood also agreed in principle last year to settle a proposed class action lawsuit filed by customers over the pandemic outages.
“Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies," said Andrew Hartnett, the president of the North American Securities Administrators Association, which coordinated the investigation, in a statement.
Robinhood neither admitted nor denied the states' findings. Lucas Moskowitz, deputy general counsel and head of government affairs at Robinhood Markets , said in a statement the company was "pleased" to resolve the matter.
"The settlement relates to past issues that Robinhood has since invested heavily in improving, including the launch of 24/7 chat and phone support, expanding our library of educational materials, and strengthening the way we supervise our technology. We remain focused on continuing to break down barriers to the markets for those who were previously kept out," he said.