PanamaTimes

Friday, Apr 19, 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

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×