The California Department of Financial Protection and Innovation (DFPI) announced on Thursday, April 6th, that it is joining a multi-state settlement with the online broker Robinhood. According to the press release, the $10 million settlement is the result of an investigation that found that Robinhood “harmed main street investors” with “operational and technical failures”.

Robinhood’s Multi-Million Dollar Settlement With Seven US States

In a Thursday press release, California’s DFPI announced a multi-state $10 million settlement with the online broker Robinhood. The announcement revealed that California’s regulator, along with the regulators from Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas conducted an investigation into the online broker’s outages and malfunctions in early 2020.

Robinhood rose to popularity during the covid-19 pandemic as numerous retail investors found themselves with the time to actively invest and trade. The online broker was also at the center of the “meme stock” craze of late 2020 and early 2021. It has, however, throughout the period. suffered from certain malfunctions and deficiencies.

The investigation conducted by the seven states under the mantle of the North American Securities Administrators Association (NASAA) was sparked certain problems that arose in March 2020. It also probed other issues with the platform for the duration of several months and found that Robinhood was negligent with the information it provided investors, failed to properly vet certain customers and accounts, failed to create adequate infrastructure for the customers, and failed to properly oversee critical technologies.

The press release, however, also highlights that Robinhood neither admits nor denies wrongdoing with the settlement. It also points out that the investigation found no proof that the online broker willfully engaged in fraudulent behavior and that, instead, fully cooperated with the regulators.

Robinhood’s Post-Meme Stock Woes

Since it rose to prominence during the covid-19 pandemic, Robinhood has had a checkered reputation. On the one hand, as a commission-free online broker, it has proven highly popular with retail investors. On the other, due to several malfunctions and trading halts at key moments, it became the target of public outcry and multiple class-action lawsuits.

Along with the NASAA investigation, Robinhood has also faced the Securities and Exchange Commission on multiple occasions. In 2020, it agreed to a $65 million settlement over the alleged misleading of customers about revenue sources and failing to satisfy the duty of best execution. The online brokers’ relatively recent foray into digital assets also drew the SEC’s attention in early 2023.

Despite the setbacks, the platform is still operating with relative success. While it had failed to meet Q4 forecasts, it still performed reasonably well and managed to put investors at ease by canceling $500 million worth of bonuses for executives. Overall, the company’s shares are down more than 70% since their peak in August 2021 but are steadily rising this year and are 23.89% in the green YTD.

This article originally appeared on The Tokenist

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