Robinhood settles $10.2 million lawsuit for locking out investors during stock drops

Robert Walker

TRENTON, NJ – The New Jersey Attorney General’s Office has announced a settlement with Robinhood, an investment app that was cited for shutting down trading, causing New Jerseyans and others financial losses.

Robinhood Financial LLC has agreed to pay up to $10.2 million in penalties for operational and technical failures that harmed investors, according to a multi-state settlement with the North American Securities Administrators Association (NASAA).

The investigation was sparked by Robinhood platform outages in March 2020, leaving hundreds of thousands of investors unable to process trades while the value of certain stocks was dropping.

The Bureau found that Robinhood committed several violations including failure to have a reasonably designed customer identification program, supervise technology critical to providing customers with core broker-dealer services, and to have a reasonably designed system for dealing with customer inquiries.


As part of the settlement, Robinhood will provide the settling states with access to a FINRA-ordered compliance implementation report and undertake remedial measures. The Bureau assessed Robinhood a civil monetary penalty of $200,000 for its operational failures, and Robinhood neither admits nor denies the findings set out in the Bureau’s orders.

“Robinhood benefitted from its reputation as a way for people with little experience to try their hand at investing in the stock market,” said Cari Fais, Acting Director of the Division of Consumer Affairs. “Its customers deserved better than the operational failures that resulted in this settlement.”

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