Saturday, July 12, 2025

Latest

Robinhood Slapped with Class Action Lawsuit Over Backdoor Commission Fees

As Robinhood’s fall from grace continues, it appears that the popular trading app has been hit with yet another grievance after a San Francisco federal court filed a class action lawsuit for failing to inform users about back-door commission fees.

Atop a similar complaint filed by securities regulators in Massachusetts regarding the manipulation of inexperienced investors, which was then followed by a $65 million SEC settlement that alleged Robinhood failed to disclose its revenue sources to customers, the trading app is now facing a class action lawsuit in San Francisco that claims the distraught company failed to notify its users it was selling their stock orders to trading firms and then charging them back-door commission fees.

Although Robinhood proclaimed on its platform that all trading is “commission free,” it did not disclose its extensive reliance on “payment for order flow,” where it collected money from market makers in exchange for executing trades. Those fees that were initially passed onto market makers were then transferred to Robinhood’s clients via inferior execution quality– which is the price at which the market orders were executed, alleges the suit.

Robinhood has yet to respond to the suit, but following its previous settlement with the SEC, the trading app agreed to monitoring by an outside consultant in order to ensure it is following the rules. Although Robinhood agreed to the settlement, it did not deny or confirm the regulator’s claims, only noting that it has turned a new leaf and is now fully transparent with its customers.


Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Mergers Set the Stage for Uranium’s Growth Cycle | Forum-Baselode Merger

The Goal is Gold Production as Soon as Possible! | Gordon Robb – ESGOLD Corp.

Snowline Gold: The Multi Billion Dollar Valley PEA

Recommended

First Majestic Produces 7.9 Silver Equivalent Ounces In Q2, Lifts Production Guidance

Antimony Resources Drills 4.17% Antimony Over 7.4 Metres At Bald Hill

Related News

Robinhood Posts 36% Revenue Jump in Q3 2024 but Still Misses Estimates

Robinhood Markets, Inc. (NASDAQ: HOOD) reported its third-quarter 2024 earnings, revealing mixed results that sparked...

Wednesday, October 30, 2024, 09:27:00 PM

Robinhood’s Preliminary Q2 Orderflow Revenues Suggests Retail Trading Mania May Be Wearing Off

After trading below its offering range since the debut day of its IPO, Robinhood (NASDAQ:...

Wednesday, August 4, 2021, 02:38:00 PM

SEC’s Adverse Decision on Payment for Order Flow Negatively Impacts Robinhood

On December 14, the U.S. Securities and Exchange Commission (SEC) voted to implement perhaps the...

Saturday, December 17, 2022, 05:54:00 PM

Robinhood Shares Decline: Falling Users Eclipse First Net Profit In Q2 2023

Robinhood Markets Inc. (NASDAQ: HOOD) posted better-than-expected second-quarter earnings on Wednesday, surprising analysts despite a...

Thursday, August 3, 2023, 10:49:00 AM

Robinhood Lays Off 9% Workforce, Points To “Hyper Growth” Period

After its disappointing Q4 2021 financials, Robinhood Markets, Inc. (Nasdaq: HOOD) announced on Tuesday that...

Wednesday, April 27, 2022, 09:29:00 AM