The California Department of Financial Protection and Innovation said that the company behind cryptocurrency and stock trading platform Robinhood will likely pay more than $10 million in penalties “for operational and technical failures that harmed main street investors.”

In an April 6 announcement, the DFPI said the settlement — up to $10.2 million — was the result of an investigation by the North American Securities Administrators Association in conjunction with securities regulators from Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas. The platform suffered a series of system outages in March 2020 causing users to miss out on trades while many of Robinhood’s services were unavailable.

“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 NASAA President Andrew Hartnett.

Robinhood experienced significant growth at the start of the COVID-19 pandemic when many people shifted to working from home and conducting online trades through the app. However, the platform’s outages caused some affected users to file a class action lawsuit against Robinhood. The U.S. Financial Industry Regulatory Authority, or FINRA, also penalized the firm for roughly $70 million for causing “widespread and significant harm” to thousands of users.

(by Turner Wright)