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Robinhood has agreed to pay a $45 million fine to redress a data breach and record-keeping failures, one of a series of penalties levied by U.S. regulators on Monday against financial groups including units of Blackstone and KKR.
The online broker paid the largest fine in a series of settlements announced by the U.S. Securities and Exchange Commission, totaling more than $100 million.
Robinhood’s failures include a 2021 data breach that exposed the email addresses and names of millions of customers, as well as record-keeping issues, including failing to properly record its positions involving odd-lot trades — which are odd-lot trades. A service popular among younger, less affluent traders.
The $45 million payment comes as the brokerage expects to post its fifth consecutive quarter of profitability. Robinhood’s net profit was $150 million in the three months to September.
The company said it was pleased to resolve the issues, describing them as historical issues.
“We are well-positioned to continue leading the industry in developing innovative products and services that our customers want and need,” Robinhood general counsel Lucas Moskowitz said in a statement. “We look forward to the leadership of the new administration. Cooperate with the SEC.”
The U.S. Securities and Exchange Commission (SEC) also announced Monday that 12 investment advisers and broker-dealers agreed to pay more than $63 million to settle charges of recordkeeping violations stemming from the use of unofficial messaging systems.
The move marks the SEC’s latest crackdown on Wall Street messaging misconduct under Chairman Gary Gensler. So far, enforcement actions have mainly targeted banks, which have agreed to pay billions of dollars in fines over “off-channel” communications.
“When companies fail to meet these obligations, the consequences extend far beyond inadequate documentation; such failures involve the transparency and integrity of markets and their participants, like the companies involved here,” SEC Acting Director of Law Enforcement Sanjay Wadhwa said on Monday.
The SEC said employees of these companies, including supervisors and senior managers, used “off-channel” communications to obtain records they were legally obligated to maintain.
Blackstone’s three divisions collectively agreed to pay the largest fine of $12 million, followed by KKR, which paid $11 million. Charles Schwab agreed to pay $10 million, while Apollo Capital Management and TPG Capital Advisors, made up of three divisions of the Carlyle Group, each agreed to pay $850 million. million dollars.
Santander US Capital Markets and PJT Partners agreed to pay minimal fines: $4 million and $600,000, respectively.
Apollo, KKR and TPG declined to comment. Blackstone Group, Charles Schwab and Santander said they were “pleased” the issue was resolved. Other groups did not immediately respond to requests for comment.
In Blackstone’s case, senior managing directors shared information about investment advice and securities trading for clients on an “unapproved” platform since at least December 2019, according to SEC filings.
