TIMES.KY

Cayman Islands, Caribbeanand International News
Monday, Jun 17, 2024

Robinhood reveals new investigation hours before its IPO

Robinhood reveals new investigation hours before its IPO

Regulators are investigating the fact that Robinhood CEO Vlad Tenev is not licensed by FINRA, Wall Street's powerful self-regulator, the online trading platform announced Tuesday.

News of the probe comes more than five months after CNN Business reported that Tenev, the public face of Robinhood, is not registered with FINRA, short for the Financial Industry Regulatory Authority. That's despite the fact that he presides over one of the nation's largest and most powerful online brokerages.

It also comes on the eve of a blockbuster initial public offering that could value Robinhood at $35 billion.

In a filing late Tuesday, Robinhood said it received a FINRA investigative request seeking documents and information related to its compliance with the agency's registration requirements for member personnel.

Robinhood said the FINRA investigation is related to the "non-registration status" of both Tenev and co-founder Baiju Bhatt, who now serves as chief creative officer.

"Robinhood is evaluating this matter and intends to cooperate with the investigation," the company said in the filing.

FINRA declined to comment on the matter, noting that its investigations are confidential. Robinhood did not respond to a request for comment.

Robinhood is expected to price its IPO on Wednesday and begin trading on the Nasdaq the following morning, CNN Business previously reported.

"Robinhood is facing lots of scrutiny in the run up to its IPO, and regulators are poring through its operations and structure," James Tierney, an assistant professor of law at the University of Nebraska College of Law, said in an email.

Tierney, who previously worked at the SEC on FINRA registration matters, said it's not surprising this scrutiny "extends to Tenev's registration status, given his prominent role as the public face" of the company.

Should Tenev be FINRA-registered?


The FINRA investigation comes after Senator Elizabeth Warren, in a February statement to CNN Business, called on regulators to examine whether executives like Tenev "should be licensed and trained on market rules and risks."

FINRA generally requires that the CEOs of registered broker-dealers be registered with the agency. The aim is to make sure these executives receive compliance training and demonstrate the competence required for leadership roles. Being registered with FINRA also allows the public to track any violations by licensed individuals via the agency's Broker Check tool.

Tenev is the CEO of Robinhood Markets, the parent company that is not registered with FINRA. (Robinhood Markets owns a broker-dealer and a clearing broker.)

The CEO of a parent company that owns a broker-dealer does not necessarily need to be registered.

At the time of the initial CNN report, Robinhood told CNN Business that Tenev does not directly oversee the FINRA-registered managers of the broker-dealer or the clearing broker, but declined to say who does.

Some experts expressed alarm at the fact that Tenev is not registered with FINRA, while others said it may not be a problem.

Latest run-in with FINRA


Some of Robinhood's rivals do have CEOs with FINRA licenses, while others do not. For instance, the CEOs of Charles Schwab (SCHW) and Robinhood rival Webull are registered with FINRA and have their Series 24 licenses as principals.

However, Square (SQ) CEO Jack Dorsey is not listed as being registered with FINRA. (In addition to its payment platform, Square's Cash App lets users invest in bitcoin and individual stocks).

The key may be just how involved Tenev is with Robinhood's day-to-day operations. Some of Tenev's prior comments suggest he holds a significant managerial role, including being involved in delicate negotiations with its clearinghouse during the GameStop trading turmoil in January.

In a late February letter to Sen. Warren, FINRA said that these determinations are "fact-specific" and require "careful assessment of the individual's activities."

The FINRA licensing investigation is just Robinhood's latest run-in with the regulator.

Last month, FINRA slapped the brokerage with its biggest-ever penalty and accused the company of harming millions of customers and giving investors "false or misleading information."

Robinhood neither admitted to nor denied the charges.

Newsletter

Related Articles

TIMES.KY
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×