Homepage > News > The SEC publishes a plan to distribute funds from the financial penalty imposed on Robinhood

The SEC publishes a plan to distribute funds from the financial penalty imposed on Robinhood

The US Securities and Exchange Commission (SEC) released a plan to distribute a $ 65 million fine imposed on Robinhood, a brokerage house, for disguising its “order flow payment” practice. As proposed last week, the financial market regulator proposed a six-step evaluation process to distribute the collected penalties to the company’s injured customers.

SEC’s employees will evaluate each qualifying investor’s claim based on calculating the loss incurred on each client order minus the increase in Robinhood and the industry benchmark for commission. In addition, the regulator will calculate interest on each client order with non-zero damage using the current short-term federal interest rate.

Investors eligible for compensation will be deemed traders directly affected by the broker’s misconduct. Robinhood was fined $ 65 million late last year. The broker was blamed for concealing the fact that his main engine of income was the controversial “Order Flow Payment”, in which he directed orders to major trading firms in return for a commission.

The broker has breached US regulations

However, redirected orders received worse execution prices, which violated the rules of the US stock market. “Robinhood has breached its integrity obligations by failing to conduct appropriate, regular, and rigorous reviews of the quality of execution of client orders,” the SEC ruling said. Robinhood did not compare its execution quality with its competitors until October 2018 and did not take appropriate steps to assess whether its high order flow commission was adversely affecting client execution prices, the Commission concluded. The SEC has already received money under the Justice Fund and will now conduct a public consultation on its distribution plan to injured parties.

Author: Izabela Kamionka

Are you a trader?

Help others and rate your broker! Use the search engine or find your broker on the list.


Last news:

Weekly news summary

ForexRev: weekly summary [09/13 – 09/19/2021]

The largest Chinese developer, China Evergrande, is on the verge of bankruptcy. The total amount ...
Read More

On September 20, the DAX 30 index will change to DAX 40

Significant changes are coming in the German DAX stock index. The biggest of these is ...
Read More
Cypriot financial regulator cysec

George Theocharides appointed new head of CySEC

The Cyprus Securities and Exchange Commission (CySEC) appointed Dr George Theocharides as the new chairman ...
Read More

The largest Chinese developer, Evergrande, is on the verge of bankruptcy

Until recently, the world's largest real estate development company is threatened with bankruptcy, which may ...
Read More

Add a comment

Your email address will not be published. Required fields are marked *


Note: Opinions and posts on represent personal opinions and views of their respective authors and should not be interpreted as recommendations to purchase or sell securities. assumes no responsibility or liability for such content.
Go to top