Crypto EcoBlog
Last week, the SEC accused Robinhood of providing misleading information to its customers, which failed to disclose the revenue source of the trading app.Vlad Tenev, Robinhood CEO, has refuted the claims that the company’s money-making tactics deceived customers. On the basis of such allegations, the Securities and Exchange Commission (SEC) decided to charge the Robinhood company million last week. He stated that Robinhood is considering adding a chief legal officer and two new chief compliance officers to its staff as an effort to improve its legal and compliance operations.“We want to have not just the best product and technology team, but the best compliance and legal and regulatory teams as well,” he told CNBC’s Jim Cramer.During CNBC’s “Mad Money show, the company’s CEO also
Topics:
<title> considers the following as important:
This could be interesting, too:
Wayne Jones writes Charles Schwab to Launch Spot Crypto ETFs if Regulations Change
Wayne Jones writes Here’s When FTX Expects to Start Repaying Customers .5B
Dimitar Dzhondzhorov writes Is Cryptoqueen Ruja Ignatova Alive and Hiding in South Africa? (Report)
Wayne Jones writes Casa CEO Exposes Shocking Phishing Scam Targeting Wealthy Crypto Users
Last week, the SEC accused Robinhood of providing misleading information to its customers, which failed to disclose the revenue source of the trading app.
Vlad Tenev, Robinhood CEO, has refuted the claims that the company’s money-making tactics deceived customers. On the basis of such allegations, the Securities and Exchange Commission (SEC) decided to charge the Robinhood company $65 million last week. He stated that Robinhood is considering adding a chief legal officer and two new chief compliance officers to its staff as an effort to improve its legal and compliance operations.
“We want to have not just the best product and technology team, but the best compliance and legal and regulatory teams as well,” he told CNBC’s Jim Cramer.
During CNBC’s “Mad Money show, the company’s CEO also explained that the historical practices that the SEC settlement is based on do not reflect the current status of Robinhood.
Robinhood Paid $65 Million to SEC for Deceiving Customers
On Thursday, the SEC had accused Robinhood of providing misleading information to its customers, which failed to disclose the revenue source of the trading app. Consequently, the company offered prices that seemed inferior to those of other brokers that cost customers $34.1 million, the amount does not account for the zero-cost trades benefit.
Robinhood, however, defended itself by claiming that its execution quality matched or even still beat that of its competitors between October 2018 and June 2019. Payments to execute customer orders by market makers such as Virtu or Citadel Securities is usually the primary revenue source for commission-free trading pioneer Robinhood.
Although the company made the settlement, it, however, did not admit or deny those charges. During the second quarter, Robinhood used legal-but-controversial practices to make trade payments worth $180 million, according to SEC filings.
SEC’s Enforcement Division director Stephanie Avakian explained:
“Robinhood provided misleading information to customers about the true costs of choosing to trade with the firm.”
The SEC’s charges just came a day after Massachusetts Secretary of State’s office had filed a complaint accusing the trading app of violating clients’ best interests laws requirement by utilizing predatory marketing on inexperienced investors.
Helping Customers to Make Viable Trading Decisions is the App’s Motive
Tenev is confident that Robinhood will continue to enable customers to make their own trading decisions by equipping them with tools and products as a self-directed brokerage. In 2013, he, together with Baiju Bhatt, co-founded the company, but a month ago, Bhatt decided to step down from the co-chief executive position.
Robinhood is mainly relying on the educational content accessible on the platform to help customers execute informed trades. Articles and various content available on the app has made the daily visits to rise up by 260% since January, as it is now estimated that over 3 million users benefit from those materials.
Currently, Robinhood serves around 16 million users, as per data from JMP Securities. Robinhood lifted its valuation to $11.7 billion after the Silicon Valley start-up raised funding worth more than $1 billion in 2020 in an effort to go public.
Tenev explained that the company knows what its customers want to see in its app. Robinhood is aware of the necessary execution quality and allows customers to give fair feedback regarding the issue. Therefore, it has allowed detailed consumer statistics regarding its execution quality to be provided in a certain section of its website, which it would use to make necessary enhancements. The actions will help the company to improve communication about payments for order flows for its revenue streams.
Robinhood’s Chief Legal Officer Dan Gallagher said that the company has the responsibility of helping millions of investors make their initial investments since it continually evolves so as to meet emerging customers’ needs.
James Lovett is a talented crypto enthusiast who finds pleasure in sharing more knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. He likes to keep himself furnished and updated with the latest innovation in the crypto industry, blockchain technology, Internet of Things (IoT) and other technologies. As a result, he tries to furnish ardent crypto supporters with the latest news on blockchain and distributed-ledger technologies. Indeed, Blockchain and Cryptocurrency is changing the world as we know “one block at a time”. As a hobby, he also trades in small amounts of cryptos every now and then. An author with experience writing for tech, digital, and cryptocurrency blogs!