The California Department of Financial Protection and Innovation (DFPI) joined a multi-state settlement with Robinhood, which will pay approximately $10.2 million in fines for registering operational deficiency that negatively affected investors during the COVID-19 crisis.

The crypto-related company was slapped with another $30 million penalty last summer by the New York State Department of Financial Services (NYDFS) for violating anti-money laundering and cybersecurity laws.

More Trouble for Robinhood

The DFPI became the latest state regulator to join the multi-million agreement with Robinhood. Prior to it, the watchdogs of Alabama, Colorado, New Jersey, Delaware, Texas, and South Dakota maintained that the firm harmed some of its investors in March 2020 by neglecting several policies.

According to the regulators, it failed to inform users about the risk associated with multi-leg option spreads, did not design a customer identification program, and did not exercise due diligence before approving certain option accounts. It also did not cooperate with the Financial Industry Regulatory Authority (FINRA) and other relevant agencies.

The operational setbacks allegedly occurred in March 2020 (at the beginning of the devastating COVID-19 pandemic) when hundreds of thousands of investors relied on Robinhood’s platform. 

NASAA President Andrew Hartnett praised the mutual efforts of the state regulators, which aim to benefit affected investors. 

“Robinhood repeatedly failed to serve its clients, but this settlement makes clear that Robinhood must take its customer care obligations seriously and correct these deficiencies,” he added.