SEC Dings Robinhood for Trading Charges

The complaints are a reminder to investors who pay low or no commissions to investigate more-opaque costs.

Robinhood, the discount broker of choice for legions of young investors, agreed in December to pay $65 million to settle Securities and Exchange Commission charges that it misled investors about revenues from accepting payments from trading firms for routing customer orders to them—a practice known as payment for order flow—and for failing to seek the best available terms to execute those orders. The SEC says trade prices that were inferior to what other brokers offered—even counting the benefit of Robinhood’s $0 commissions—cost Robinhood customers $34.1 million overall between October 2016 and June 2019. Robinhood, with an initial public offering reportedly in the works for this year, settled the charges without admitting or denying guilt.

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