Feds Seized Robinhood CEO's Phone in GameStop Trading Halt Investigation

Robinhood, the stock trading app that was subject to a record fine Wednesday, announced it intends to go public Thursday. From a report: In its filing documents, the company admits that many of its customers are furious about how it handled January's GameStop stock bonanza and that it is currently subject of at least 49 class action lawsuits related to trading restrictions it placed on the stock in January. The company also said it is under investigation by a series of regulators, state attorneys general, the SEC, and the U.S. Department of Justice in proceedings associated with the trading restrictions; the company said its CEO Vladimir Tenev has also had his cell phone seized by federal attorneys.

In January, Robinhood restricted the purchase of GameStop, AMC, and other "meme" stocks because the app literally did not have enough money to comply with regulations that require a certain amount of liquidity from companies that allow for stock trading. This restriction correlated with a days-long dive in the stock prices of GameStop, which skyrocketed in January and February and led to widespread calls from lawmakers, traders, and Redditors on the WallStreetBets subreddit to investigate Robinhood. Those investigations are ongoing, according to Robinhood's S-1 filing with the SEC. In its filing, Robinhood states that the fallout from these restrictions still have the potential to be disastrous for the company. âoeWe have become aware of approximately 50 putative class actions ... relating to the Early 2021 Trading Restrictions."

GME

[pretzel87]

To the moon!

Re:

[kackle]

This is the way.

Re:

[Lab Rat Jason]

So say we all!

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[slashmydots]

But seriously though...launch that crooked scumbag off this planet

Closed my RH account 1.5 years ago .. well

[tekram]

I left $0.25 in the account so I could still monitor it. I realized it was just a matter of time before RH is going to settle with the SEC and/or pay a large fine and there was a chance a lot of customers will get some compensation. That was proved true when the SEC issued a settlement notice on Jun 4, 2021 where RH settled the charges that RH customers 'received inferior execution prices compared to what RH's competitors would have charged'. If you were an early customer between 2015 and 2018, you should get a settlement.

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[burtosis]

Will this settlement be in time to short the IPO? Asking for a friend.

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[ayesnymous]

Probably not a good idea to short it. These millennials and the younger generation are nuts.

Re:Closed my RH account 1.5 years ago .. well

[leonbev]

So... now your account will have $2.25 in it vs 25 cents? That's about the size of an average class action settlement, unless you're part of the legal team filing the claim.

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[kaatochacha]

Over the years, I've "joined" in three class settlements ( that I know of). The address and contact phone for all were the address I'd grown up in, with a phone number that hasn't changed since 1970. One was a Microsoft settlement years ago that would supposedly send you hardware. In that time, I've received...nothing. No check, no nothing. The settlement system makes sure that the group being sued pays. It's just not so careful about making sure members of the settlement actually receive anything. And the

Guilty hardware.

[Ostracus]

This just in. The phone gets thrown under the bus.

I'd love to

[ttspttsp]

read those DM's, I hope they leak.

The Feds

[kackle]

HODL the phone!

Something doesn’t add up...

[burtosis]

Vladdy testified [c-span.org] in front of congress and under oath that trading was halted due to liquidity issues. That’s why every retail trader on RobinHood got shafted during extreme market volatility, not his fault and legal.

Then, the head of the SEC [sec.gov] testified subsequently that the liquidity issue was resolved immediately.

That’s pretty much the same answer I'd now expect about his underwear right about now.

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[burtosis]

In January, the rapidly changing prices, high volatility, and significant trading volume of the meme stocks prompted larger-than-usual central clearing margin calls on broker-dealers. Some of those broker-dealers, such as Robinhood, scrambled to secure new funding to post the required margin. A number of brokers chose to restrict additional buying activity by their customers in a variety of the meme stocks.

These decisions call into question whether broker-dealers are adequately disclosing their policies and procedures around potential trading restrictions; whether margin requirements and other payment requirements are sufficient; and whether broker-dealers have appropriate tools to manage their liquidity and risk. I’ve asked staff to look at these issues carefully.

Gensler noted that "at least one firm didn't have sufficient liquidity to meet margin calls and had to fundraise within hours to meet $1 billion-plus obligations, and several brokers chose to shut down customer access to trading."

So yes, it’s between the lines, but notice that even if robinhood was the “at least one”, sufficient liquidity was achieved at a maximum of hours, not days. Realistically, the surest sign of when a broken and likely criminally corrupt brokerage goes beyond a predatory agreement with retail is when simply buying a stock to hold completely crashes the derivative bets within it to the point of illiquidity of the brokerage itself - something that violates the very heart of a brokerages fiduci

Robin hood was just following the rules

[Zekolas]

So not defending RH, I will tell anyone who will listen get a real brokerage (Schwab, Vandgaurd , FIdelity) and not a "App" However vangaurd was just following regulations, it literally ran out of money when 10000s of new users opened a RH account and transferred money to them. Now it takes a few days for the money to settle but RH will loan you the money as soon as you initiate the transfer. They ran out of money to front people and they followed regulations and stopped doing that once they ran out of mo

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[Zekolas]

**I mean RH not vangaurd

Re: Robin hood was just following the rules

[dhrabarchuk]

All true. But the central issue is the conflict of interest RH had protecting Citadel. https://www.cnbc.com/2021/02/1... [cnbc.com] Shenanigans were definitely possible.