Financial Industry Regulatory Authority (FINRA) gave Robinhood a $70 million fine. The official report said that Robinhood provided users with “misleading” information, gave access to options trading to unverified users and allowed the application to break down, which led to monetary loss of customers.
Up to date, it is a record FINRA fine — Robinhood has already agreed to pay the full amount. Robinhood spokeswoman Jacqueline Ramsay said the company is happy to leave this issue behind and move on towards its goal. The company also said that it has already done a lot in response to the claims of the regulator. In particular, it launched a hotline, introduced stricter criteria for trading options, and improved compliance.
Some journalists and analysts are of the opinion that the imposed fine may affect the date of Robinhood’s IPO. It was previously expected to take place in June / July, but may now be postponed. An anonymous source told Bloomberg last week that it could take longer than planned for the US Securities and Exchange Commission to review Robinhood’s filing.
Despite the difficulties with regulators, Robinhood’s business is doing well. In the first quarter of this year, the company earned $331 million in revenue from orders payments, which is 3.5 times more than in the first quarter of 2020 ($ 91 million). The number of app users has also increased. Robinhood’s IPO remains one of the most anticipated this year.
Since July 2020, the value of Robinhood shares has increased by 276% — which is the current profitability of the Global Technologies Private Portfolio fund clients.
Robinhood is one of the fastest-growing fintech startups in the United States. The company is developing an application for investing in stocks, ETFs, options, gold and cryptocurrencies without commissions.
On May 20, Robinhood unveiled a new product — IPO investments for retail investors, which will become another source of the company’s revenue.