UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 92591 / August 6, 2021

ADMINISTRATIVE PROCEEDING

File No. 3-20171

In the Matter of

Robinhood Financial, LLC,

Respondent.

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ORDER APPROVING 

PLAN OF DISTRIBUTION

On December 17, 2020, the Commission issued an Order Instituting Administrative and 

Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 

15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial 

Sanctions and a Cease-and-Desist Order (the “Order”)1 against Robinhood Financial, LLC 

(“Robinhood” or the “Respondent”). In the Order, the Commission found that Robinhood 

launched its retail brokerage business in 2015, and by mid-2018, it was one of the largest retail 

broker-dealers in the United States. One of Robinhood’s primary selling points was that it did 

not charge its customers trading commissions. In reality, however, “commission free” trading at 

Robinhood came with a catch: Robinhood’s customers received inferior execution prices 

compared to what they would have received from Robinhood’s competitors. For larger value 

orders, this price differential exceeded the amount of commissions that Robinhood’s competitors 

would have charged. These inferior prices were caused, in large part, by the unusually high fees 

Robinhood charged the principal trading firms to which it routed its customer orders for the 

opportunity to obtain Robinhood’s customer order flow. These fees are generally referred to as 

“payment for order flow.” 

Robinhood omitted to disclose its receipt of payment for order flow in certain of its 

communications with its retail customers. Since Robinhood’s launch, payment for order flow 

has been Robinhood’s single largest source of revenue. In its customer agreements and trade 

confirmations, Robinhood stated it “may” receive payment for order flow, and it disclosed 

certain information about those payments, as required, in its SEC-mandated Rule 606 reports. 

However, in FAQs on its website describing how it made money, and in certain communications 

with customers addressing the same issue, Robinhood omitted payment for order flow when it 

described its revenue sources because it believed that payment for order flow might be viewed as 

controversial by customers. Robinhood also instructed its customer service representatives not 

 

1

 Securities Act Rel. No. 10906 (Dec. 17, 2020).
2

to mention payment for order flow in responding to questions about Robinhood’s sources of 

revenue.

As a broker-dealer that routed its customer orders for execution, Robinhood had a duty to 

seek to obtain the best reasonably available terms for its customers’ orders, including price. This 

duty is referred to as the duty of “best execution.” From July 2016 through June 2019, while 

Robinhood was on notice that its high payment for order flow rates from principal trading firms 

could result in inferior execution prices for its customers, Robinhood violated its duty of best 

execution by failing to conduct adequate, regular, and rigorous reviews of the execution quality it 

provided on customer orders. Robinhood did not begin comparing its execution quality to that of 

its competitors until October 2018, and did not take appropriate steps during the entire period to 

assess whether its high payment for order flow rates adversely affected customer execution 

prices. The Commission ordered the Respondent to pay a $65,000,000.00 civil money penalty. 

The Commission created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 

2002, so the civil penalty paid can be distributed to harmed investors (the “Fair Fund”).

The Fair Fund is comprised of the $65,000,000.00 paid by the Respondent, pursuant to 

the Order. The Fair Fund is subject to the continuing jurisdiction and control of the Commission 

and has been deposited at United States Department of Treasury's Bureau of the Fiscal Service in 

an interest-bearing account. Any interest accrued will be added to the Fair Fund.

On June 4, 2021, the Division of Enforcement, pursuant to delegated authority, published 

a Notice of Proposed Plan of Distribution and Opportunity for Comment (the “Notice”)2

pursuant to Rule 1103 of the Commission’s Rules on Fair Fund and Disgorgement Plans 

(“Commission’s Rules”).3 The Notice advised interested persons that they could obtain a copy of 

the Proposed Plan of Distribution (the “Proposed Plan”) from the Commission’s public website 

at http://www.sec.gov/litigation/fairfundlist.htm or by submitting a written request to Noel 

Gittens, United States Securities and Exchange Commission, 100 F Street, NE, Washington, DC 

20549-5876.

The Notice also advised that all persons desiring to comment on the Proposed Plan could 

submit their comments, in writing, no later than thirty (30) days from the publication of the 

Notice in the following ways: (1) to the Office of the Secretary, United States Securities and 

Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (2) by using the 

Commission’s Internet comment form (http://www.sec.gov/litigation/admin.shtml); or (3) by 

sending an e-mail to rule-comments@sec.gov. The Commission received no negative comments 

concerning the Proposed Plan during the comment period.4 

 

2

 Exchange Act Rel. No. 92115 (June 4, 2021).

3

 17 C.F.R. § 201.1103.

4

 A total of 123 comments were received in response to the Notice during the comment period. Additional 

comments have been received since the comment period ended, which have also been reviewed and considered. 

None of the comments objected to, or raised any concerns regarding the pool of investors deemed to be eligible to 

participate in the distribution, the method of allocation used in the Proposed Plan, or the Proposed Plan generally. 

As such, no modification of the Proposed Plan is necessary.
3

The Plan provides for the distribution of the Net Available Fair Fund5to Robinhood’s 

customers who were harmed as a result of Robinhood’s omissions and false and misleading 

disclosures during the Harm Period described in the Order. 

The Division of Enforcement now requests that the Commission approve the Proposed 

Plan. 

Accordingly, it is hereby ORDERED, pursuant to Rule 1104 of the Commission’s Rules,6

that the Proposed Plan is approved, and the approved Plan of Distribution shall be posted 

simultaneously with this order on the Commission’s website at www.sec.gov.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.7

Vanessa A. Countryman

Secretary 

 

5

 All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Proposed 

Plan.

6

 17 C.F.R. § 201.1104. 

7

 17 C.F.R. § 200.30-4(a)(21)(iv).