Federal and Affirm Regulators Probe Robinhood Over Meme Inventory Trading Restrictions

Illustration for article titled Federal and State Regulators Probe Robinhood Over Meme Stock Trading Restrictions

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U.S. regulators are investigating Robinhood after it quickly blocked users from buying so-called meme stocks on its stock buying and selling app amid the Reddit-fueled quick squeeze earlier this 365 days.

Robinhood has obtained inquiries from the U.S. Securities and Switch Commission’s Division of Examinations, the Financial Industry Regulatory Authority, and the Unique York Attorney Long-established’s Administrative heart, amongst other disclose attorneys frequent offices and disclose securities regulators, the firm stated in a securities submitting this week. On high of these probes, it’s also juggling nearly 50 proceedings linked to the so-called GameStonks saga, alongside side a class-action lawsuit from pissed-off stockholders.

Closing month, retail traders from the r/WallStreetBets forum and in other locations on-line sold up stocks for beleaguered companies like GameStop, AMC, and Nokia to send the rate hovering and screw over hedge funds that bet on their prices to tank. On the head of this looking out for frenzy, Robinhood quickly steer clear off users from buying meme stocks, a circulation it claims wasn’t aimed at users but quite resulted from surging clearinghouse collateral requirements.

Affirm regulators and FINRA are also investigating Robinhood for an outage the app skilled in March 2020 as the market reacted to favorite lockdowns amid the coronavirus pandemic. Robinhood’s alternatives buying and selling approval process and linked buyer communications and displays are being scrutinized as half of this investigation as successfully. In this week’s submitting, Robinhood stated its devices, Robinhood Securities and Robinhood Financial, are negotiating a settlement with FINRA that will perchance perchance well potentially cost the dealer a minimum of $26.6 million.

As half of but one other investigation, the SEC, the Unique York Long-established’s Administrative heart, and other regulators are looking into incidents of unauthorized takeovers of Robinhood buyer accounts, the firm stated.

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So TL;DR: Appears to be like to be like like Robinhood goes to be knee-deep in trusty proceedings for a while. Grab some popcorn, of us, this drama is much from over.

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