Brokerages · Brokerage · Regulatory action
Robinhood
Headline
The SEC found that Robinhood publicly downplayed how much it relied on selling your trades to market makers (payment for order flow) — which was actually MORE THAN 80% OF COMPANY REVENUE in 2015 through mid-2016…
The SEC found that Robinhood publicly downplayed how much it relied on selling your trades to market makers (payment for order flow) — which was actually MORE THAN 80% OF COMPANY REVENUE in 2015 through mid-2016 — while customers got EXECUTION PRICES AVERAGING MORE THAN $15 WORSE on orders over 500 shares (more than $23 on orders over 2,000 shares) than they would have gotten elsewhere. Robinhood paid a $65 MILLION fine for it. The 'commission-free' app wasn't free — the cost was just hidden in the price you actually got for your trade.
- Severity
- Evidence tierUnassigned
- Claims confirmed
- Last verified2026-08-04
Primary source. www.sec.gov/newsroom/press-releases/2020-321 — Verified - primary source confirmed.
Terms
Arbitration
Not independently confirmed this pass — standard FINRA arbitration disclosure expected industry-wide.
Data sharing
PFOF has historically been Robinhood's PRIMARY revenue source — transaction-based revenues, chiefly payment for order flow and similar market-maker rebates, were 77% of net revenue in 2021 ($1.40B of $1.82B; about 49% options/30% crypto/20% equities); SEC found in a Dec 2020 settlement that Robinhood made misleading statements about PFOF as its main revenue source and failed its 'best execution' duty to customers, resulting in a $65 MILLION SEC FINE — among the largest broker-specific enforcement actions in this audit's carrier/bank/ISP/auto findings so far. SEC also found Robinhood customers got meaningfully worse execution prices (an average of more than $15 worse per order on orders over 500 shares; about $34.1 million in aggregate lost price improvement, Oct 2016–June 2019) than customers at non-PFOF brokers, even after accounting for those brokers' per-trade commissions.
Fees and billing
Zero-commission model funded almost entirely by PFOF and other transaction-based revenue rather than direct customer fees.
Contacts
Privacy contact. Not recorded.
Legal notice. Not verified this pass. If publicly traded: SEC Form 10-K cover page gives the official corporate address; the Secretary of State business-entity search in the state of incorporation gives the registered agent, which must accept service. If private: the state registered agent is usually the only reliable route.
Mailing address. Not recorded.
Evidence
| Claim | Kind | Support | Sources |
|---|---|---|---|
| 1. The SEC found that Robinhood publicly downplayed how much it relied on payment for order flow. | fact | supported | none recorded |
| 2. Payment for order flow was 77% of all company revenue. | fact | unsupported | 1 (0 confirmed) |
| 3. Customers received inferior execution prices. | fact | supported | none recorded |
| 4. Execution prices were up to $15 worse per 500-share order than elsewhere. | fact | unsupported | 1 (0 confirmed) |
| 5. Robinhood paid a $65 million fine for it. | fact | supported | none recorded |
| 6. The 'commission-free' app wasn't free; the cost was hidden in the trade price. | characterization | n/a | none recorded |
0 of 6 claims have a confirmed source of their own.
Sources
| Source | Claim | Tier | Status | Quote |
|---|---|---|---|---|
| regulator · 2020-12-17 www.sec.gov/litigation/admin/2020/33-10906.pdf | Claim 2 | Unassigned | corrected | “payment for order flow comprised more than 80% of the company's revenue” Quote basis: not recorded. |
| regulator · 2020-12-17 www.sec.gov/litigation/admin/2020/33-10906.pdf | Claim 4 | Unassigned | corrected | “for orders over 500 shares, the average Robinhood customer order lost over $15 in price improvement” Quote basis: not recorded. |
Source vault
Link status: Candidate - not yet fetched
| Document | Last fetch | |
|---|---|---|
| Privacy policy robinhood.com/us/en/support/articles/robinhood-privacy-policy/ | Not fetched yet | NOT CONFIRMED |
| Terms of service robinhood.com/us/en/support/articles/customer-agreement/ (Customer Agreement — direct URL not individually captured this pass) | Not fetched yet | NOT CONFIRMED |
| Website No URL recorded | Not fetched yet | — |
| Primary source https://www.sec.gov/newsroom/press-releases/2020-321 Verification: Verified - primary source confirmed | Not fetched yet | — |
Enforcement
No enforcement actions are linked to this row.
State statute
No HQ state on file, so no state statute applies by headquarters.