Robinhood Settles Regulatory Action and Agrees to Overhaul Gamification Practices

Posted on February 13th, 2024 at 1:44 PM
Robinhood Settles Regulatory Action and Agrees to Overhaul Gamification Practices

From the desk of Jim Eccleston at Eccleston Law 

After a prolonged legal battle with the Massachusetts Securities Division, Robinhood has agreed to pay $7.5 million and revamp its digital engagement practices, according to Secretary of the Commonwealth William Galvin.

The settlement follows accusations that Robinhood violated state law by employing aggressive tactics to attract inexperienced investors and using gamification to encourage continuous use of its mobile app. The consent order resolves administrative complaints filed by Galvin's Securities Division in 2020 and 2021.

As reported by ThinkAdvisor, the consent order also addresses cybersecurity issues related to a November 2021 data security breach affecting approximately 117,000 customers in Massachusetts. The breach occurred when an unauthorized third party accessed customer information through a voice phishing scam, convincing an agent to download third party remote access software on a Robinhood-issued laptop.

The consent order reveals deficiencies in Robinhood's internal cybersecurity policies and procedures, including the absence of safeguards to protect investor information and inadequate procedures for employees to report data breaches promptly. As part of the consent order, Robinhood has admitted to these shortcomings and agreed to undergo an independent review of its cybersecurity policies.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

Fantastic news!!!!  Your professionalism, support and expertise were greatly appreciated.  You made a difficult situation much more bearable.

Marci M.

LATEST NEWS AND ARTICLES

February 4, 2026
Investor Redemptions Rise in Nontraded BDCs Amid Credit Concerns

Financial advisors and their clients have increased redemptions from nontraded business development companies (BDCs) following a series of high-profile corporate bankruptcies, according to InvestmentNews. The surge highlights growing investor concern about liquidity and credit exposure within these high-yield but often risky investment ...

February 3, 2026
FINRA Accuses Spartan Capital of Widespread Churning That Allegedly Harmed Customers

The Financial Industry Regulatory Authority (FINRA) has brought a disciplinary complaint against Spartan Capital Securities and several senior leaders of the New York City–based broker-dealer, alleging that the firm facilitated excessive trading that generated millions of dollars in revenue while causing substantial losses to customers.

February 2, 2026
California Investors Allege Unsuitable DST Recommendations in FINRA Arbitration

Two investors from the San Francisco Bay Area have filed a FINRA arbitration claim against brokerage firm Realized Financial and its financial advisors.