The United States Securities and Exchange Commission (SEC) today issued an order regarding the fund established for the $65 million that Robinhood has agreed to pay in December 2020.
As FX News Group has reported, in December, the SEC announced charges against the company for repeated misstatements that failed to disclose its receipt of payments from trading firms for routing customer orders to them, and with failing to satisfy its duty to seek the best reasonably available terms to execute customer orders.
In particular, the Commission found that, from 2015 through September 2018, Robinhood made material misrepresentations and omissions relating to its revenue sources, specifically its receipt of payment from certain principal trading firms, for routing Robinhood customer orders to them and relating to certain statements about the execution quality Robinhood achieved for its customers’ orders. The Commission also found that Robinhood’s customers received inferior execution prices compared to what they would have received from Robinhood’s competitors, caused in large part by the high payments for order flow resulting in Robinhood’s failure to satisfy its duty of best execution.
The Commission ordered Robinhood to pay a civil money penalty of $65 million. The Order also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty can be distributed to harmed investors. The Fair Fund includes the $65 million paid by the Respondent.
The Division of Enforcement has sought the appointment of JND Legal Administration as the fund administrator and requested that the administrator’s bond be set at $65 million. JND is included in the Commission’s approved pool of administrators.
Accordingly, today, the SEC ordered that JND is appointed as the fund administrator, pursuant to Rule 1105(a) of the Commission’s Rules of Fair Fund and Disgorgement Plans (“Commission’s Rules”), and shall obtain a bond in the amount of $65,000,000.00, in accordance with Rule 1105(c) of the Commission’s Rules.