On-line brokerage Robinhood Markets Inc (NASDAQ:HOOD) has filed its newest monetary quarterly report with the Securities and Change Fee (SEC).
The report, apart the monetary metrics, contains an replace on authorized and regulatory issues. The newest developments on this respect concern an error that occurred in December 2022.
FINRA Enforcement employees are conducting investigations associated to, amongst different issues:
- Robinhood Securities’ reporting of fractional share trades, as relevant, to a Commerce Reporting Facility, the Over-the-Counter Reporting Facility, the Order Audit Path System, and the Consolidated Audit Path;
- RHS’s reporting of accounts holding vital choices positions to the Massive Choice Place Report system;
- processing of sure requests for transfers of property from Robinhood by the Automated Buyer Account Switch System; responses to Digital Blue Sheets requests from FINRA;
- the delays in notification from third events and course of failures inside our brokerage techniques and operations in reference to the dealing with of a 1-for-25 reverse inventory cut up transaction of Cosmo Well being, Inc, in December 2022 (the “This autumn 2022 Processing Error”);
- Robinhood Monetary’s compliance with FINRA registration necessities for member personnel;
- advertising involving social media influencers and associates;
- collaring the costs of sure commerce orders; and RHS’ compliance with greatest execution obligations.
Robinhood says it’s cooperating with these investigations.
Robinhood Securities (RHS) has additionally obtained requests from the SEC Division of Enforcement concerning its compliance with Regulation SHO’s commerce reporting and different necessities in reference to securities lending, fractional share buying and selling, and the This autumn 2022 Processing Error, and beforehand obtained comparable requests from FINRA examinations employees.
RHS and RHF have additionally obtained requests from the SEC Division of Enforcement and FINRA Enforcement employees associated to the Corporations’ compliance with recordkeeping necessities, together with requests concerning off-channel communications.
Relating to the January 2021 buying and selling restrictions, RHM, RHF, RHS, and Robinhood’s Co-Founder and CEO, Vladimir Tenev, amongst others, have obtained requests for data, and in some instances, subpoenas and requests for testimony, associated to investigations and examinations of the Early 2021 Buying and selling Restrictions from the USA Legal professional’s Workplace for the Northern District of California (USAO), the U.S. Division of Justice (DOJ), Antitrust Division, the SEC’s Division of Enforcement, FINRA, the New York Legal professional Normal’s Workplace, different state attorneys common workplaces, and numerous state securities regulators. Additionally, a associated search warrant was executed by the USAO to acquire Mr. Tenev’s mobile phone. There have been a number of inquiries primarily based on particular buyer complaints.
Robinhood has additionally obtained requests from the SEC Division of Enforcement and FINRA associated to worker buying and selling in sure securities that have been topic to the Early 2021 Buying and selling Restrictions, together with GameStop Corp. and AMC Leisure Holdings, Inc., through the week of January 25, 2021. These issues embody requests associated as to whether any worker buying and selling in these securities might have occurred after the choice to impose the Early 2021 Buying and selling Restrictions and earlier than the general public announcement of the Early 2021 Buying and selling Restrictions on January 28, 2021.
FINRA Enforcement has additionally requested details about insurance policies, procedures, and supervision associated to worker buying and selling typically.
Importantly, Robinhood confirms that, in January 2023, roughly 4,700 collectively represented prospects filed a press release of declare with FINRA to provoke arbitration of particular person claims in opposition to RHF and RHS arising out of the Early 2021 Buying and selling Restrictions.
