May 13, 2021

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Robinhood in talks with Wall Street regulator Finra over probe

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Robinhood is in talks with a Wall Street regulator to settle an investigation into last year’s March blackouts and its options trading processes, as the preferred trading platform for retail investors grapples with a series of regulatory issues.

The Securities and Exchange Commission, several state regulators, and Wall Street’s self-regulatory body, Finra, are examining how the trading platform “displays liquidity and purchasing power to clients and its process for trading. ‘option trading approval,’ Robinhood said in a regulatory filing Friday.

The company said it was in talks with staff at Finra, or the Financial Sector Regulatory Authority, about a possible resolution of the investigation and expected to pay a fine in the event. framework of any potential settlement.

Robinhood has become a target of regulators and lawmakers as its popularity has exploded. The CEO of the company, Vlad Tenev, squared for hours with a congressional committee last week on its role in the GameStop saga, on the trading restrictions the company put in place at the height of the stock buying frenzy and the consequences of its alleged “gamification” of the ‘investment.

Even before the mania for “meme stock”, Robin Hood had already faced a series of regulatory issues. In December, the company agreed to pay $ 65 million to settle SEC charges that it failed to provide its clients with the best trading prices through its platform.

In March of last year, as global stock markets began to collapse due to the rapid spread of the coronavirus, Robinhood had three breakdowns over the course of a week, eliciting backlash from its customers.

Robinhood is also facing a lawsuit from the family of Alex Kearns, a 20-year-old trader who committed suicide last summer, after believing he had lost over $ 700,000 after a complicated options trade on the app.

Finra and Robinhood both declined to comment on the disclosure on Friday.

In the wake of the fallout from the GameStop saga, the SEC also said Friday it was halting trading at 15 companies due to “questionable business and social media activity.” The list of companies included Bebida Beverage, Helix Wind, MediaTechnics and Marani Brands, all of which trade as penny stocks.

The regulator already suspended trading at a handful of other companies earlier this month.



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