Banking app Robinhood is fined $1.25 million in the United States in connection with its failures relating to the routing of customer orders through broker-dealers.

The Financial Industry Regulation Authority (FINRA) announced that the investment app failed to ensure customer orders were executed on the best available terms when routing orders through its broker-dealer partners. The failures were reported to have taken place between October 2016 and November 2017, when Robinhood allegedly failed to conduct sufficient due diligence in choosing how to execute orders on behalf of its customers.

The fine was negotiated with Robinhood as settlement of the charges, which breach FINRA guidelines for best execution.

FINRA regulations obliges operators to “use reasonable diligence to ascertain the best market for the subject security and buy or sell in such market so that the resultant price to the customer is as favorable as possible under prevailing market conditions.”

According to a statement from Robinhood, the company has paid the fine, as well as taking a number of other internal steps to prevent repeat failures, including appointing a best execution manager and independent consultants to review business processes, The Block reported. A Robinhood spokesperson was quoted by the news outlet saying the company had already improved its order routing processes:

“The facts on which the settlement is based do not reflect our practices or procedures today. The agreement relates to a historic issue during the 2016-2017 timeframe involving consideration of alternative markets for order routing, internal written procedures, and the need for additional review of certain order type… Over the last two years, we have significantly improved our execution monitoring tools and processes relating to best execution, and we have established relationships with additional market makers.”

The routing of non-direct equity orders is not in itself illegal. However, with Robinhood found to be neglecting its responsibilities of due diligence on behalf of clients, the fine represents a significant step from FINRA towards cleaning up the practice.

The issue is thought to have affected hundreds of thousands of orders processed through Robinhood over the period.

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