Robinhood, the retail trading platform at the center of GameStop's meme stock fiasco, has been penalized $70 million by the Financial Industry Regulatory Authority, albeit for reasons unrelated to GameStop; FINRA has ordered Robinhood's owners to pay "systematic 57 million in fines and ordered to pay $12.6 million plus interest for what it called "failure to supervise and material injury.

Robinhood's trading app profited from the growing popularity of retail day trading during the Covid-19 craze and the associated rise of "meme stock" trading organized by speculator communities like the WallStreetBets subreddit. Between last March and the present, the number of users grew from 13 million to 31 million.

FINRA's press release explained that the fine is the largest leverage in its history, and that the size of the fine and restitution will be "significant for the millions of customers who received false or misleading information from the firm, the millions of customers affected by the firm's system outage in March 2020, and the millions of customers extensive and material harm suffered by customers," including "thousands of customers for whom the company approved trades despite the fact that it was not appropriate for them to trade options."

The company explained that the company's decision to take the refund was the result of its consideration of the "extensive and material harm suffered by customers.

Among those who received "false or misleading information" from Robin Hood was Alex Kearns, who began day trading as a hobby during the lockdown. Kearns killed himself after incorrectly reading that his account had a negative balance of $730,165. In reality, there was a positive balance of $16,000.

Robinhood subsequently published a blog post about "holding ourselves accountable to our customers" and expanding customer support and communication to include "indications of buying power, cash balances (including negative cash balances), historical performance figures, and debit spread transactions and to modify communications with customers regarding the risk of loss in debit spread transactions."

The FINRA statement also detailed Robinhood's use of bots to approve new accounts, resulting in a "series of outages and significant system failures."