Robinhood Trading App Files for IPO with SEC even as it Faces Biggest Financial Penalty from US Financial Industry Regulatory Authority
Robinhood, a leading stock and cryptocurrency trading app, has filed an application for an IPO (Initial Public Offer) with the US Securities and Exchange Commission (SEC). The IPO application was filed on Thursday in a Form S-1 registration statement.
In the filed application Robinhood intended to move forward with an IPO for its Class A common stock. It went on to say that the company wants to raise US$100 million through the IPO. If approved by SEC, the company plans to trade on the Nasdaq exchange using the ticker “HOOD”. Robinhood also went on to underscore that it will reserve 20-35% of the shares for its own users.
Interestingly, Robinhood filed for the IPO with the SEC a day after it was served by the US Financial Industry Regulatory Authority (FIRA) to pay a hefty fine of US$70 million for its alleged “systemic supervisory failures” and “widespread and significant harm”. In fact, this leading trading app still faces business practice-related scrutiny from the US SEC.
Reports say that in its IPO filing, Robinhood has claimed that it has reached an agreement-in-principle with the regulatory body and will pay a fine of US$57 million and US$4.5 million in restitution to the affected users.
Regarding the outages, trading restrictions (related to the GameStop stock controversy), and account takeovers, Robinhood has faced multiple lawsuits from individuals, state authorities, and regulators.
In a statement, the company has said that related to “anti-money laundering and cybersecurity-related issues”, it anticipates paying US$15 million to the New York State Department of Financial Services.
In its report, Robinhood has claimed that as of March 31, 2021, it holds US$11.6 billion in terms of cryptocurrency assets under customers. It also claimed that in Q1 2021, 17% of its total revenue came from crypto transactions. Over the same period, more than 9.5 million users have used the Robinhood trading app for trading cryptocurrencies worth US$88 billion.