Robinhood agreed to a $70 million settlement which includes $57 million in fines and almost $13 million in compensation to customers.

Finra alleged a series of failings by Robinhood, which agreed to a $57 million fine and $12.6 million in compensation for harmed investors. Many allegations involved problems with technology that automated the opening of new accounts or trading strategies and updated clients about their balances or borrowed funds.

The company opened 90,000 new accounts from 2016 to 2018 despite red flags signaling possible identity theft or other fraud, Finra said. Robinhood qualified thousands of other accounts to trade options even though the clients didn’t meet eligibility criteria, according to Finra.

One example cited by Finra: A new customer, who was 20 years old, was rejected for options trading after noting that he had little investing experience and a low risk tolerance. Three minutes later, the customer changed his risk appetite to “medium” and said he had three years of investing experience. Within seconds, Robinhood approved him for options, according to Finra’s settlement document.

Wall Street Journal