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Robinhood charged with misleading customers about commission

Robinhood agreed to pay $65 million to settle charges that it misled customers about its revenue sources, depriving them of more than $34 million over a three year period, according to a Securities and Exchange Commission statement released today.

The company was also hit with a lawsuit yesterday from Massachusetts regulators that allege the company failed to act in the best interests of its customers.

Robinhood allegedly misled and lied by omission to its customers about its "no commission" policy, implying that customers were saving money because they were not charged commissions, according to the SEC statement. Robinhood's actual trades were executed at rates much higher than competing brokerages because the company failed to negotiate the best terms, meaning that despite the lack of commission fee, customers were actually losing money on the trades compared to other brokerages, the regulators said in the complaint.

One of the primary ways that Robinhood makes money, known as payment-for-order-flow, has been long criticized by some experts as reducing the best possible outcome for customers.

"Robinhood provided inferior trade prices that in aggregate deprived customers of $34.1 million even after taking into account the savings from not paying a commission," agency representatives wrote in the statement. "Robinhood made these false and misleading statements during the time in which it was growing rapidly."

Robinhood's $65 million settlement did not confirm or deny the charges. As part of the settlement, the company also agreed to hire an independent consultant to review customer communications, policies and procedures and ensure the company is held to its claims.

"The settlement relates to historical practices that do not reflect Robinhood today. We recognize the responsibility that comes with having helped millions of investors make their first investments, and we're committed to continuing to evolve Robinhood as we grow to meet our customers' needs," said Dan Gallagher, Robinhood's chief legal officer, in a statement.

Big Tech benefits from Biden’s sweeping immigration actions

Tim Cook and Sundar Pichai praised President Biden's immigration actions, which read like a tech industry wishlist.

Newly-inaugurated President Joe Biden signed two immigration-related executive orders on Wednesday.

Photo: Chip Somodevilla/Getty Images

Immediately after being sworn in as president Wednesday, Joe Biden signed two pro-immigration executive orders and delivered an immigration bill to Congress that reads like a tech industry wishlist. The move drew enthusiastic praise from tech leaders, including Apple CEO Tim Cook and Alphabet CEO Sundar Pichai.

President Biden nullified several of former-President Trump's most hawkish immigration policies. His executive orders reversed the so-called "Muslim ban" and instructed the attorney general and the secretary of Homeland Security to preserve the Deferred Action for Childhood Arrivals, or DACA, program, which the Trump administration had sought to end. He also sent an expansive immigration reform bill to Congress that would provide a pathway to citizenship for undocumented individuals and make it easier for foreign U.S. graduates with STEM degrees to stay in the United States, among other provisions.

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Emily Birnbaum

Emily Birnbaum ( @birnbaum_e) is a tech policy reporter with Protocol. Her coverage focuses on the U.S. government's attempts to regulate one of the most powerful industries in the world, with a focus on antitrust, privacy and politics. Previously, she worked as a tech policy reporter with The Hill after spending several months as a breaking news reporter. She is a Bethesda, Maryland native and proud Kenyon College alumna.

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