Robinhood Markets’ (HOOD) two broker-dealer units, Robinhood (HOOD) Securities LLC and Robinhood Financial LLC, have agreed to pay $45 million in combined civil fines to settle various charges made by the U.S. Securities and Exchange Commission (SEC) related to record keeping, data breach, and other violations.
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Robinhood Settles Multiple SEC Allegations
In a statement, the SEC’s acting enforcement director Sanjay Wadhwa said that the two Robinhood firms didn’t adhere to an array of significant regulatory requirements, including failure to accurately report trading activity, maintain books and records, timely submit suspicious activity reports, and comply with short sale rules.
It is worth noting that the violations included a 2021 data breach that leaked millions of customer names and emails. The SEC alleged that the two Robinhood units failed to maintain sufficient policies and procedures to protect customer information.
Robinhood said it was pleased to resolve the allegations and emphasized that most of these matters are historical and have been previously addressed by its two broker-dealer units.
It is worth noting that this settlement doesn’t cover the SEC’s threat to file a lawsuit against Robinhood’s crypto business. Last year, Robinhood received a Wells Notice from the SEC, warning that it might sue the company’s crypto unit for violating securities laws.
Is Robinhood Stock a Good Buy?
Despite regulatory pressures, Wall Street remains bullish on Robinhood Markets stock. In fact, on Monday, JMP Securities analyst Devin Ryan reiterated a Buy rating on HOOD stock and raised the price target to $60 from $53, calling Robinhood one of JMP’s top four stock ideas with a compelling risk/reward profile. Likewise, Barclays analyst Benjamin Budish reaffirmed a Buy rating on HOOD stock and increased the price target to $54 from $49, as he sees a “very strong beat likely” for the fourth quarter.
Overall, Robinhood Markets stock scores a Strong Buy consensus rating based on 12 Buys and four Hold recommendations. The average HOOD stock price target of $48.67 implies about 23% upside potential. HOOD shares have rallied over 262% over the past year.
