Robinhood, the online brokerage platform, has agreed to a $45 million settlement with the U.S. Securities and Exchange Commission (SEC) for allegedly breaching more than ten securities law provisions. The charges affect two of its subsidiaries, Robinhood Securities LLC and Robinhood Financial LLC, highlighting systemic compliance issues.

The SEC's investigation revealed failures in critical regulatory obligations, including improper reporting of trading activity, short sale rule violations, delayed suspicious activity reports, inadequate record-keeping, and lapses in customer data protection. Notably, between 2020 and 2021, Robinhood failed to maintain customer electronic communications and submitted over 11,000 inaccurate Electronic Blue Sheets, misreporting 392 million transactions.

Additional findings pointed to cybersecurity vulnerabilities in 2021, which exposed millions of customers' data, and insufficient safeguards against identity theft from 2019 to 2022. From December 2019 to May 2022, Robinhood also failed to comply with Regulation SHO, aimed at preventing abusive short-selling.

The penalties break down to $33.5 million for Robinhood Securities and $11.5 million for Robinhood Financial, both payable by January 27. Despite the settlement, Robinhood neither admitted nor denied wrongdoing. Interestingly, Robinhood shares remained stable, showing minimal impact from the settlement.

Robinhood’s crypto business, while not directly implicated, has faced scrutiny as well. Last September, it settled a $3.9 million case in California over crypto withdrawal issues between 2018 and 2022. Meanwhile, the company’s crypto trading has surged, with trading volumes up 112% and assets under custody climbing to $19.5 billion in Q3.

This settlement underscores the growing regulatory pressure on financial platforms to tighten compliance and safeguard customer interests.