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Robinhood Markets has agreed to pay $45 million to settle SEC charges for violating regulations related to trading activity reporting, identity theft protection, and a data breach that compromised customer data. The penalties will be shared between its two main units, Robinhood Financial and Robinhood Securities. Despite the settlement, the company's market performance remained relatively stable, with only a slight drop in share price following the announcement.
Robinhood has agreed to pay $45 million to settle SEC charges related to securities law violations, including inaccurate reporting and cybersecurity failures. The penalties involve $33.5 million from Robinhood Securities and $11.5 million from Robinhood Financial, with both firms admitting to the SEC's findings and committing to improve compliance measures. Despite these issues, Robinhood's crypto segment has seen significant growth, reporting $119 billion in trading volume and expanding its offerings to include 20 digital assets.
Morgan Stanley's wealth management division will pay a $15 million fine after the SEC charged it with failing to prevent four former financial advisors from stealing millions from client accounts between May 2015 and July 2022. The SEC found that the firm lacked adequate systems to detect unauthorized transfers, violating the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934. In addition to the fine, Morgan Stanley has agreed to a compliance review and has compensated affected customers for their losses.
Kenneth Leech, former co-CIO of Western Asset Management, has been charged with fraud for allegedly running a $600 million "cherry-picking" scheme, favoring certain clients in trade allocations. The SEC claims he misled investors and lied during testimony. Leech, who has a nearly 50-year unblemished career, plans to vigorously defend himself against the charges.
Indian billionaire Gautam Adani has been indicted in New York for allegedly orchestrating a bribery scheme involving Indian officials to secure solar power contracts worth billions. Alongside seven executives, including his nephew, he faces charges of securities fraud and conspiracy, which could exacerbate the ongoing public relations crisis for Adani Group following previous allegations of accounting fraud. The SEC claims that the defendants misled US investors about their anti-bribery compliance while raising significant capital during the scheme.
The SEC has intensified enforcement of the whistleblower protection rule, Rule 21F-17(a), which prohibits companies from hindering whistleblowing through restrictive agreements. Acting Director Sanjay Wadhwa emphasized the critical role of whistleblowers in detecting securities law violations and announced record penalties, including an $18 million fine against J.P. Morgan for using confidentiality agreements that limited clients' ability to report to the SEC. The Commission aims to deter violations and ensure compliance by addressing illegal language in various employment-related contracts.
Gurbir Grewal, the director of the SEC’s Division of Enforcement, will resign from his position on October 11, 2024. He has led the division since August 2021 and previously served as New Jersey Attorney General. Sanjay Wadhwa, the current deputy director, will take over as acting director.
Sanjay Wadhwa
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