Not upheld: scam protection and irresponsible investment facilitation complaint against Robinhood U.K. Ltd

Decision detail

Summary

Mr W complained that Robinhood failed to protect him from a pump and dump investment scam after he purchased shares in company O through tips received in a WhatsApp group, resulting in near-total loss when the stock price collapsed. Robinhood declined to reimburse his losses, and the ombudsman upheld this decision. The ombudsman found that Robinhood's terms clearly stated Mr W was responsible for all trades and that capital was at risk, creating no expectation of proactive monitoring. The firm was not required to assess Mr W's investor experience before allowing him to trade, and the applicable rules do not automatically obligate reimbursement for scam victims in these circumstances.

The Ombudsman's reasoning

The ombudsman found that Robinhood's terms clearly stated Mr W's capital was at risk and he was responsible for all trades, creating no reasonable expectation of proactive monitoring. The rules do not require firms to assess investor experience before offering stockbroking services, nor do they automatically obligate reimbursement for scam victims in these circumstances. Robinhood treated Mr W fairly throughout the account opening, trade facilitation, and complaint response process.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website