Securities Lawyers Blog
Is a brokerage firm responsible for broker misconduct? Under FINRA rules, a firm such as Robinhood Securities, LLC must supervise the financial advisors it registers, and it can be held liable in FINRA arbitration when a broker’s unsuitable recommendations, unauthorized trading, or misrepresentations cause investment losses. The broker misconduct attorneys at Gana Weinstein LLP bring these claims on behalf of investors and can evaluate whether a firm failed to supervise your broker.
Robinhood Securities is the self-clearing broker-dealer of Robinhood Markets, providing clearing, settlement and custody for trades in stocks, ETFs and options placed through the Robinhood investing app. Formed in Delaware in 2016 and based in Lake Mary, Florida, the firm began clearing for Robinhood customers in 2018 and supports a platform with more than 27 million funded customers.
Robinhood Securities, LLC – By the Numbers:
- CRD #: 287900
- Regulatory Events: 2
- Arbitration Events: 3
- Broker Employees: 154
Robinhood Securities, LLC – In the News:
FINRA v. Robinhood Securities, LLC (Case #2019060756501) – From May 2014 through September 2023, RHF, and from at least November 2018 through July 2022, RHS, failed to establish and maintain supervisory systems that were reasonably designed for the firms’ brokerage businesses, resulting in numerous violations of securities laws and FINRA rules. From July 2016 to October 2021, RHF did not accurately and completely disclose to customers its practice of “collaring” market orders by converting them to limit orders, and, from May 2014 to December 2021, RHF’s supervisory system was not reasonably designed to achieve compliance with RHF’s obligations under FINRA Rules 2210 and 2010 to communicate to customers accurate and fair and balanced information about its order handling practices. As a result, RHF violated FINRA Rules 2210, 3110, and 2010 (both independently and by virtue of the foregoing rule violations), and NASD Rule 3010. From January 2017 through November 2021, RHF, and from November 2018 to November 2021, RHS failed to establish and implement reasonable anti-money laundering (AML) programs, which caused the firms to fail to detect, investigate, or report a wide variety of suspicious activity, including manipulative trading, suspicious money movements, and account takeovers by third-party hackers. From November 2018 through August 2020, RHF also failed to establish a reasonable customer identification program (CIP). As a result, Robinhood violated FINRA Rules 3310 and 2010.
The FINRA actions described above involve Robinhood Securities, LLC itself, and investors whose losses are connected to the conduct FINRA identified may have claims against the firm. Gana Weinstein LLP offers free consultations and we welcome all inquiries.