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Robinhood’s IPO filing reveals the US Attorney’s Office executed a search warrant for CEO Vlad Tenev’s cell phone

  • Robinhood’s IPO filing revealed the US Attorney’s Office launched a search warrant for its CEO’s cell phone.
  • The warrant was executed after the company temporarily restricted trading during the GameStop frenzy.
  • Robinhood said the incident harmed its brand and listed it as a risk factor for the company.

Robinhood revealed in its S-1 filing that the US Attorney’s Office launched a search warrant for CEO Vlad Tenev’s cell phone.

The company, which publicly filed for an IPO on Thursday, listed the search warrant for Tenev’s personal cell phone as a potential risk factor for investors looking to buy a share in the company.

It said the company has received several requests for information and testimonies, as well as subpoenas after Robinhood temporarily restricted trading earlier this year. It is also involved in numerous litigations related to the issue and said it has been made aware of 50 putative class action lawsuits. The company said it is complying with the requests.

“These proceedings … may subject us to fines, penalties and monetary settlements,” the company said in its S-1 filing with the US Securities and Exchange Commission. “[It could] increase regulatory scrutiny of our business, restrict our operations or require us to change our business practices.”

In January, Robinhood came under scrutiny after it temporarily restricted the trading of 13 equities, including GameStop and AMC. In its filing, the company said its decision to restrict trading had negatively impacted its brand, and could pose a future risk to investors.

Though the company eventually lifted the ban, it received widespread public criticism. New York Rep. Alexandria Ocasio-Cortez said Robinhood’s decision was “unacceptable.” 

That month, the company explained it had limited trading on stocks that had been fueled by the Reddit and retail investor trading frenzy due to a spike in its SEC-mandated deposit requirements which the company did not have enough capital to cover. Since, the startup has raised over $1 billion to avoid future deposit issues.

In February, Tenev testified before US congress regarding the restrictions and the GameStop trading turmoil. At the hearing, congress grilled the CEO over how Robinhood “gamifies” investing.

On Wednesday, Robinhood was slapped with a $70 million fine by the securities industry’s self-regulator, FINRA, for misleading customers and system outages that the agency said hurt Robinhood’s customers. In its public filing, the startup said it will likely incur similar fines in the future.

The S-1 filing is one of the first comprehensive looks at Robinhood’s financials. In 2020, its revenue grew 245% to hit $959 million, while it reversed losses to post a $6.3 million profit. Though, the first quarter of 2021 saw a $1.4 billion loss amid the retail-trading saga.

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