Robinhood under investigation over communications compliance

ROBINHOOD Markets said regulators are investigating the firm’s compliance with recordkeeping requirements, including employees’ use of “off-channel communications.”

The firm is cooperating with probes by the enforcement divisions of the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority, the California-based company said on Wednesday (May 11) in a quarterly filing.

The SEC is also looking into whether the brokerage followed rules about trade reporting related to securities lending and fractional share trading, according to the filing. 

Last year, regulators reached settlements with a group of big banks in a sprawling investigation into how the firms monitored their employees’ communications on unauthorised messaging apps such as WhatsApp.

Robinhood also reported first-quarter results after US markets closed on Wednesday. Revenue for the period totalled US$441 million, beating the US$422.8 million average estimate of analysts in a Bloomberg survey. It reported an adjusted net loss of US$511 million, or 57 US cents a share, 1 cent worse than Wall Street anticipated. 

Shares of Robinhood rose 4.8 per cent in early trading before New York exchanges opened on Thursday, after previously closing at US$9.07. The shares had lost more than three-quarters of their value since the firm’s 2021 initial public offering through Wednesday’s market close. BLOOMBERG