Controversial trading app Robinhood has been hit with what the Financial Industry Regulatory Authority say is the biggest penalty it has ever issued. The regulator has ordered the company to pay $57 million in penalties and around $13 million in restitution to customers over "systemic supervisory failures," USA Today reports. The regulator said the issues included false and misleading information, along with harm suffered by customers in March last year, when customers were unable to trade stocks during the sell-off early in the pandemic, reports the New York Times.
The issues date from before this year's rise in "meme stocks" like GameStop, which brought more attention to the online brokerage. Jessica Hopper, head of FINRA’s department of enforcement, said the size of the penalties reflects the "scope and seriousness of Robinhood's violations," the AP reports. Robinhood says it is "democratizing finance" with its easy-to-use app, though its critics accuse it of encouraging inexperienced investors to make risky trades. Among the cases cited by the regulator was that of 20-year-old Alex Kearns, who took his own life last year after he mistakenly thought he had lost $730,000. FINRA said Robinhood showed Kearns and other customers "inaccurate negative cash balances." (Read more Robinhood stories.)