You may have heard that a trading app called Robinhood is going public tomorrow. If you haven’t, you should know it’s kind of a big deal. It is the favored platform of Millennials and other stock market mutineers. It is going to revolutionize both the way IPOs are done and the cryptocurrency markets, the latter eventually. It’s done quite well for itself—well enough to perhaps earn a $35 billion valuation—even if more than four-fifths of its revenue is currently in the regulatory crosshairs. Oh, and speaking of regulatory crosshairs, if you’re aiming to spend $38 to $42 or more depending on how generous a bump the degenerates provide to get in on the meme stock to end all meme stocks, there are a couple of things you should probably know.

Regulators are investigating the fact that Robinhood CEO Vlad Tenev is not licensed by FINRA, Wall Street's powerful self-regulator, the online trading platform announced Tuesday…. Regulators are also probing Robinhood employees' stock trades that occurred around the time of the company's controversial stock restrictions imposed in January amid the Reddit market turmoil.

Just another few lines in the already voluminous “existential risk factors” section of Robinhood’s corporate filings going forward, you might think. And that’s true, but that’s not all.

FINRA generally requires that the CEOs of registered broker-dealers be registered with the agency…. Tenev is the CEO of Robinhood Markets, the parent company that is not registered with FINRA…. The CEO of a parent company that owns a broker-dealer does not necessarily need to be registered….

The key may be just how involved Tenev is with Robinhood's day-to-day operations. Some of Tenev's prior comments suggest he holds a significant managerial role, including being involved in delicate negotiations with its clearinghouse during the GameStop trading turmoil in January.

Seems serious, as do the insider-trading allegations, which if true do not seem likely to endear Robinhood to the day-trading set to which it has allocated 35% of its IPO shares, but which certainly seem likely to perk up the ears of the plaintiffs’ lawyers already suing the company for favoring literally everyone other than its users during l’Affaire GameStop. On the other hand, nothing seems to actually matter anymore, so it’ll probably be fine.

Robinhood reveals new regulatory probes on the eve of its blockbuster IPO [CNN]
Robinhood’s IPO to Test Loyalty of Retail Trading Legion It Helped Create [WSJ]
Robinhood Walks IPO Pricing Tightrope [WSJ]

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