The Financial Institutions Regulatory Authority (FINRA) is investigating Robinhood Financial due to founders’ failure to comply with registration requirements.
According to documents filed by Robinhood with the US Securities and Exchange Commission (SEC), on July 26, the company received an “inquiry request” from FINRA. The compliance of Robinhood with the “FINRA registration requirements” is in question, in particular, the status of the company’s co-founders Vladimir Tenev and Baiju Bhatt.
“Robinhood received a FINRA inquiry requesting documents and information related to FINRA’s compliance with registration requirements for the organization’s employees, including in connection with the lack of FINRA registration for Teneva and Bhatta. Robinhood is addressing this issue and intends to cooperate with the regulator. ”
Although it has already been reported that Tenev does not have a FINRA license, the latest investigation is a new agency initiative. The regulator requires employees who “deal with securities” to register and pass a series of tests to verify their “competence” in the securities industry. According to FINRA, this is a temporary measure designed to guarantee brokers “minimum requirements for industry understanding and experience.”
Robinhood previously argued that Tenev was exempt from registration with FINRA because he is the CEO of Robinhood Markets, a holding company, rather than its trading subsidiary Robinhood Financial.
Earlier this week, Robinhood announced investments in cryptocurrency lending and staking services in addition to developing a cryptocurrency wallet. As a reminder, the company is preparing to go public this week.
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