When financial service providers experience multiple outages, things often end in disaster. Robinhood suffered multiple outages globally in 2020. The company agreed to pay $640,000 in damages to put this matter to rest.
Another Blow For Robinhood
It has been a rather interesting period for Robinhood, although not positive for the company. Robinhood has been caught up in various legal issues due to ongoing outages throughout 2020. Service providers should have ample redundancy to ensure a smooth trading experience if market volatility occurs. Unfortunately, this company seemingly could not provide that service and must now pay the price for its failures.
Over 40 Vermont customers complained to Robinhood and went one step further. They officially filed reports with the Vermont Department of Financial Regulation. As a result, affected users weren’t able to enter, modify or cancel their orders. Nor was there any viable customer support by Robinhood, as users could not access live chat or phone support.
With the settlement in place, affected users can recover any losses they sustained. Additionally, it covers Robinhood’s automated process to determine who can access high-level options and margin trading. There have been some discrepancies on that front, too, although no further action will be taken for now.
In 2021, Finra fined Robinhood $57 million and issued a $12.6 million restitution fine. Additionally, the SEC fined the company $65 million due to misleading customers. Those costs directly result from Robinhood’s outages and questionable option trading methods and access. Other regulators are still looking at options to go after the company.