Robinhood, the broker of choice for legions of online day traders, is in talks with securities regulators and other agencies on a number of matters, including the surge in GameStop and other so-called meme stocks last month.
The company announced in a regulatory filing on Friday that it had received requests for information from federal prosecutors, the Securities and Exchange Commission, various attorneys general, and other financial regulators regarding its decision to restrict trading in stocks, including GameStop, last month.
The filing also states that the financial industry regulator known as Finra and the SEC are investigating the company’s options trading platform and how it displays information about options trading and cash positions to its clients. Robinhood has been criticized since the death of Alexander Kearns, a 20-year-old who killed himself for believing he suffered more than $ 700,000 in losses, according to its app, its information indicates. Mr. Kearns’ family has filed an unlawful death lawsuit against the agent.
Robinhood, a privately held company with funding from several Silicon Valley companies, also announced other investigations, including an investigation by Finra into a March 2020 outage that prevented some customers from accessing the company’s online trading platform and its mobile app to access the great market volatility as a result of the coronavirus.
Robinhood has become popular with quick-fingered retail investors and day traders in recent years as there are no commissions charged on trades. However, last year it settled a dispute with the SEC over disclosing to customers about the way it made money.
The company said it faces at least four potential class action lawsuits for disclosing the fees it receives from other companies.
This source of income – known as payment for the flow of orders – caught the attention of disgruntled users after Robinhood last month restricted trading in GameStop and other stocks that got into a retail frenzy that temporarily skyrocketed video game retailers’ stocks let.
In the regulatory filing, Robinhood announced that there are at least “46 alleged class actions and three individual lawsuits” over the trade restrictions.
