Not upheld: failure to prevent scam/market manipulation; failure to identify and intervene in suspicious trading patterns complaint against Robinhood U.K. Ltd

Decision detail

Summary

Mrs S complained that Robinhood U.K. Ltd failed to prevent her losing money to a 'pump and dump' scam after she purchased shares in company X in March 2025 following a social media promotion. She argued that Robinhood should have identified the market manipulation scheme and intervened, particularly given her behaviour as a new, inexperienced customer depositing a significant sum into a single volatile stock. Robinhood declined the complaint, citing its execution-only service model and the difficulty of identifying market manipulation in real-time. The ombudsman upheld Robinhood's position, finding that the execution-only nature of the service meant Mrs S bore sole responsibility for her investment decisions, and that there was insufficient evidence Robinhood should have identified the scheme given that discussions occurred privately via WhatsApp and no regulatory warnings or exchange suspensions existed.

The Ombudsman's reasoning

The ombudsman found that Robinhood's execution-only service model meant Mrs S bore sole responsibility for her investment decisions, with no obligation on Robinhood to assess suitability. While Robinhood must have systems to prevent and detect market manipulation, the requirement is that such systems should aim to prevent and detect manipulation, not that they be 100% effective. Market manipulation is difficult to identify in real-time, and the fact that discussions occurred privately via WhatsApp, combined with the absence of regulatory warnings or exchange suspensions, meant Robinhood had insufficient basis to identify the scheme. The ombudsman was not satisfied that Robinhood's actions or omissions caused Mrs S's losses.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website