Robinhood Pays Fine, Files For IPO

Fractional retail investing app Robinhood filed for IPO on Thursday, registering for a public listing on the Nasdaq under the stock ticker HOOD. The S-1 filing shows the platform has 18 million accounts and made $7.45M last year.

The news comes days after FINRA fined Robinhood $57M and ordered the firm to pay $13M in restitution to retail investors locked out of trading during the GameStop and meme stock craze in Q1 2021. FINRA is a self-regulating brokerage industry organization that handed Robinhood its largest fine ever.

The firm also paid out $65M to settle an SEC charge that alleged the firm did not accurately disclose how Robinhood made money: the truth is they sell orders they receive to larger market-making hedge funds.

After the firm’s leadership faced questioning by Congress over allegedly disenfranchising traders, the filing shows that Robinhood has paid dearly. The filing reports the firm lost $1.4B in Q1 2021 after being forced to raise billions of dollars overnight to cover the cost of the trading explosion. While options trading ballooned prices through the roof, Robinhood found itself strapped for cash.

The firm has raised $5.5B since 2013, including a combined $3.4B during and since the meme stock craze. They plan to raise $100M from the listing, though that number is regularly used as a stand-in for public filings.

The firm said that the FINRA judgment was part of a deal to release the S-1 filing at long last, delayed by regulators and their concerns over the cryptocurrency side of the trading app. The filing said that Robinhood plans to allocate up to 35% of its shares for its platform users.

Kevin Travers was a Reporter at deBanked.