American regulator fines Robinhood for $1.25 million 

Hundreds of thousands of orders each month fell outside the firm’s “regular and rigorous” review process 

Robinhood

American regulator fines Robinhood for $1.25 million. Source: shutterstock.com

FINRA announced it has fined Robinhood $1.25 million for best execution violations related to its customers’ equity orders and related supervisory failures.

Robinhood agreed to retain an independent consultant to conduct a comprehensive review of the firm’s systems and procedures related to the case.

FINRA revealed that for more than a year, Robinhood routed its customers’ non-directed equity orders to 4 broker-dealers, all of which paid Robinhood for order flow.

FINRA Rule 5310 requires firms to use reasonable diligence to ascertain the best market for the subject security and buy or sell in such market so that the resultant price to the customer is as favorable as possible under prevailing market conditions.

Robinhood did not perform systematic best execution reviews of nonmarketable limit orders, stop orders, and orders received outside of regular trading hours.

Best execution of customer orders is a key investor protection requirement. FINRA member firms must exercise reasonable diligence in performing regular and rigorous reviews to achieve best execution for their customers
Jessica Hopper, Senior Vice President and Acting Head of FINRA’s Department of Enforcement

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