Robinhood CEO says SEC charges ‘do not reflect Robinhood immediately’

Robinhood CEO Vlad Tenev on Monday responded to claims that the inventory buying and selling firm deceived prospects about its cash making ways, which led it to a $65 million settlement with the Securities and Exchange Commission final week.

In an look on CNBC’s “Mad Money,” Tenev mentioned Robinhood, which is privately owned, has made workers modifications to step up its authorized and compliance operations, together with hiring a chief authorized officer and including two new chief compliance officers with the goal to be “best in class.”

“The SEC settlement relates to historical practices that don’t reflect Robinhood today,” he mentioned in an interview with CNBC’s Jim Cramer. “We want to have not just the best product and technology team, but the best compliance and legal and regulatory teams as well.”

The SEC on Thursday accused Robinhood of deceptive prospects and omitting important data relating to the buying and selling app’s income. Robinhood, a pioneer in commission-free buying and selling, attracts cash by sending buyer orders to market makers like Citadel Securities or Virtu, who pay to execute trades. The legal-but-controversial apply, the SEC mentioned, led to execution costs that had been inferior to different brokers’ costs, costing prospects $34.1 million however the advantage of zero-cost trades.

An SEC submitting reveals that Robinhood introduced in $180 million in funds for trades through the second quarter.

“Robinhood provided misleading information to customers about the true costs of choosing to trade with the firm,” Stephanie Avakian, director of the SEC’s Enforcement Division, mentioned, CNBC reported.

With the settlement, the corporate didn’t admit or deny the charges.

Dan Gallagher, a former SEC commissioner through the Obama years, joined Robinhood in May as the corporate’s chief authorized officer, in accordance with his LinkedIn web page.

Tenev, who co-founded and launched the corporate with Baiju Bhatt in 2013, mentioned Robinhood will proceed to function as a self-directed brokerage, offering instruments and merchandise to assist prospects make their very own buying and selling choices. Bhatt stepped down as co-chief government a few month in the past.

One manner Robinhood is making an attempt to assist prospects execute knowledgeable trades is thru academic content material accessible on the platform. More than three million customers learn the content material and articles accessible on the app, and every day visits are up 260% since January, in accordance with Tenev.

JMP Securities estimates that Robinhood now serves 16 million customers, although Tenev declined to verify the quantity.

The firm has additionally improved the way it communicates funds for order flows for its income streams, together with including a bit to the web site that particulars shopper statistics about execution high quality, he added.

“I think, ultimately, that’s what customers are interested in,” Tenev mentioned. “I think what they really want to see is, what is the execution quality that I get from Robinhood? And that’s fair feedback, and now we provide that on our website and we’re looking to make enhancements as time goes on.”

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Written by Business Boy


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