Robinhood Gets Ready for the Meme Stock World It Created
Annie Massa, 14 July 2021
Hi all, it’s Annie from Bloomberg’s investing team. Soon, Robinhood Markets Inc. will go public. The debut—which could happen in the coming weeks—will see Robinhood entrust its share price to the same retail investors who have been using its app to roil markets.
The free stock trading app has been around for eight eventful years. During the pandemic, Robinhood traders congregated on Reddit message boards and drove wild swings in the price of companies like GameStop Corp. and AMC Entertainment Holdings Inc. Then, when Robinhood put limits on customer purchases of those stocks, the startup incurred social media wrath, along with some lawsuits.
Two weeks ago, Robinhood sustained its largest blow yet. The Financial Industry Regulatory Authority, the industry’s self-funded watchdog, dealt the company a nearly $70 million penalty for infractions including misleading customers about trading with borrowed money, faulty technology oversight and lax approval systems for options traders. Robinhood didn’t admit or deny the allegations, which is typical in these situations.
The fine was a record for Finra. And it capped a litany of legal woes for the company. Robinhood’s unfinished business also includes an inquiry from the New York State Department of Financial Services, which may extract about $15 million to settle claims over its anti-money laundering and cybersecurity practices, according to the filing.
