Robinhood Markets – Wikipedia

US-based fiscal services company

Robinhood Markets, Inc. is an american english fiscal services company headquartered in Menlo Park, California, [ 2 ] [ 3 ] known for pioneering commission -free trades of stocks, exchange-traded funds and cryptocurrencies via a mobile app introduced in March 2015. Robinhood is a FINRA -regulated broker-dealer, registered with the U.S. Securities and Exchange Commission, and is a extremity of the Securities Investor Protection Corporation. [ 4 ] [ 2 ] The company ‘s tax income comes from three chief sources : interest earned on customers ‘ cash balances, selling ordering information to high-frequency traders ( a rehearse for which the SEC opened an investigation into the party in September 2020 ) [ 5 ] and allowance lend. [ 6 ] [ 7 ] As of 2021, Robinhood has 31 million users [ 8 ] and 1.6 million people on a waitlist for its cryptocurrency wallet. [ 9 ]

history

Co-founder of Robinhood Vladimir Tenev speaks onstage during TechCrunch Disrupt NY 2016 at Brooklyn Cruise Terminal on May 10, 2016 in New York City.

Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously built high-frequency trade platforms for fiscal institutions in New York City. [ 4 ] [ 10 ] The company ‘s name comes from its deputation to “ provide everyone with access to the fiscal markets, not fair the affluent ”. Tenev noted that executing a deal cost brokerages “ fractions of a penny ” but they typically charged fees of $ 5 to $ 10 per barter, arsenic well as required account minimums of $ 500 to $ 5,000. [ 11 ] [ 12 ] The firm showcased its app publicly for the first time at LA Hacks, first gear published it on AppStore in December 2014 and then officially launched the app in March 2015. [ 13 ] As of January 2015, 80 % of the firm ‘s customers belonged to the “ Millennial “ demographic and the average customer senesce was 26. [ 14 ] Fifty percentage of users who have made a trade use the app daily and 90 % use the app hebdomadally. [ 15 ] As of 2021, Robinhood has 31 million users. [ 8 ] In April 2017, Robinhood raised $ 110 million at a $ 1.3 billion evaluation led by Yuri Milner of DST Global, Greenoaks Capital, and Thrive Capital. [ 16 ] [ 17 ]
Robinhood co-founder Baiju Bhatt ( left ) and moderator Josh Constine ( right ) speak onstage during Day 2 of TechCrunch Disrupt SF 2018 at Moscone Center on September 6, 2018 in San Francisco, California. On May 10, 2018, Robinhood closed a $ 363 million Series D financing round led by DST Global. [ 18 ] As of May 2018, Robinhood raised a sum of $ 539 million in venture capital fund, with the last evaluation at $ 5.6 billion, astir from their previous evaluation of $ 1.3 billion. [ 18 ] In February 2018, the ship’s company announced that it would be moving its headquarters from Palo Alto to the former headquarters of Sunset magazine in Menlo Park. [ 19 ] In May 2019, reports from Bloomberg and other outlets publicized Robinhood ‘s avocation of an extra $ 200 million in fund, which could value the company in the $ 7 billion to $ 10 billion rate. [ 20 ] [ 18 ] In November 2019, Robinhood announced its expansion to the United Kingdom. [ 21 ] During the 2020 stock market crash, Robinhood trading increased. [ 22 ] The subsequent commercialize rise was partially attributed to Robinhood traders, but a learn indicated that Robinhood traders had short casual shock on major shares. [ 23 ] In May 2020, it was announced that Robinhood had raised $ 280 million in guess fund at a pre-money evaluation of $ 8.3 billion led by Sequoia Capital, and 3 months late, the company announced a $ 200 million Series G funding round from a raw investor, D1 Capital Partners, on August 17. [ 24 ] [ 25 ] In deep June 2021, Robinhood was fined $ 57 million by the FINRA and has been ordered to pay $ 13 million in restitution to clients affected by outages and misleading communications in March 2020. This was the largest-ever FINRA penalty in the history of the organization. [ 26 ] The company went public on the Nasdaq on July 29, 2021, under the stock certificate heart HOOD. The open price was $ 38, but dropped soon afterwards to a low of $ 33.35 before starting to recover, [ 27 ] [ 28 ] reaching an all time high at $ 85. subsequently, it fell sharply again after facing growing regulative uncertainty, plunging on Q3 earnings and disclosing that a security rupture affected 7 million customers. [ 29 ] On 1 December 2021 the stock price reached all clock time lows below $ 25 and had dropped 70 % over the last four months. [ 30 ] This rout was a boon to short-sellers of the store. [ 31 ]

Read more:   Ironic Definition & Meaning - Merriam-Webster

Products and services

Stock and ETF trade

Robinhood ‘s original product was deputation -free trades of stocks and exchange-traded funds. In February 2016, Robinhood introduced clamant deposits, crediting users immediately for deposits up to $ 1,000 ; previously, funds took three days to appear via ACH transfer. [ 32 ] In September 2016 they launched Robinhood Gold, a agio subscription design that offers up to $ 50,000 in instantaneous deposits, margin trade, and more grocery store analytics. [ 33 ] As of February 2017, the company had executed over $ 30 billion in trades. [ 6 ] In August 2017, the ship’s company began offering release stocks in rally for referring modern users. [ 34 ] In December 2017, options trade was introduced. [ 35 ] Services not offered include retirement accounts, common funds and bonds. [ 36 ] [ 37 ] Robinhood typically only supports trade stocks and ETFs listed on the Nasdaq and New York Stock Exchange, and normally does not support over-the-counter securities such as those traded on OTC Markets. In August 2018, Robinhood introduced confirm for american english depository receipts, adding 250 highly search international stocks. [ 38 ] Robinhood has prohibited its users from purchasing some bad penny stocks, such as banning purchases of Helios and Matheson Analytics, the owner of MoviePass, in August 2018. [ 39 ] In October 2019, several major brokerages such as E-Trade, TD Ameritrade, and Charles Schwab announced in quick succession they were eliminating trade fees. competition with Robinhood was cited as a rationality. [ 40 ] [ 41 ] [ 42 ] Although, Charles R. Schwab said that it was within his brokerage ‘s intentions to finally eliminate trade fees, as the firm had historically been a dismiss agent. [ 43 ] Support for purchasing fractional shares and automatic rifle dividend reinvestment was introduced in December 2019. [ 44 ] Automatic recurring investments were introduced in May 2020. [ 45 ] Access to initial populace offer ( IPO ) shares was introduced in May 2021. [ 46 ] In March 2022, Robinhood announced it was adding four extra hours to elongated trade for clients. [ 47 ] In a push to finally provide 24/7 equities trade, Robinhood said it will be available from 7:00 AM to 8:00 PM ET. [ 47 ]

Cryptocurrency deal

On January 25, 2018, Robinhood announced a waitlist for commission-free cryptocurrency deal. [ 48 ] [ 49 ] By the conclusion of the first day, the waitlist had grown to more than 1,250,000. [ 50 ] Robinhood began offering trade of Bitcoin and Ethereum to users in California, Massachusetts, Missouri, and Montana in February 2018. [ 51 ] In May 2018, Robinhood expanded its trade platform to Wisconsin and New Mexico. [ 52 ] By 2021, cryotocurrency deal was available in every state of matter except Hawaii and Nevada. [ 53 ] Robinhood later added deal for Bitcoin Cash, Dogecoin, Ethereum Classic and Litecoin. [ 54 ] In September 2021, automatic recurring investments was introduced. [ 55 ] Robinhood does not support cryptocurrency wallets and deposits or withdrawals of cryptocurrencies, but it is planning to introduce these features, and launched a waitlist in September 2021. [ 56 ] [ 57 ] CEO Vladamir Tenev stated that Robinhood may add more coins, saying, “ We feel very very full about the coins that we ’ ra presently listing on our chopine and any new coins that we add we want to feel equally, if not more good. ” [ 58 ] In April 2022, Robinhood added trade for Shiba Inu, Solana, Compound and Polygon. [ 59 ]

deposit

In June 2018, it was reported that Robinhood was in talks to obtain a U.S. banking license, with a spokesperson from the company claiming the company was in “ constructive ” talks with the U.S. OCC. [ 60 ] In December 2018, Robinhood announced check and savings accounts, with debit cards issued by Ohio-based Sutton Bank would be available in early 2019. [ 61 ] Robinhood claimed the accounts would have a 3 % annual interest rate ; at the clock time of the announcement, the highest interest rate on a savings account from a accredited bank was 2.36 %. [ 62 ] Robinhood initially claimed the accounts would be SIPC insure, which the SIPC denied. [ 63 ] The products were rebranded as “ Cash Management ” the adjacent day. [ 64 ] In January 2019, the waitlist and sign-up page were removed from the app. [ 65 ] A newfangled Cash Management feature was announced in October 2019, with FDIC insurance from respective collaborator banks and an annual 2.05 % interest pace, though lowered before launch to 1.8 % after a federal rate cut. [ 66 ] The feature launched in December 2019. [ 67 ]

Read more:   Frequently asked questions for Internships

Controversies

payment for regulate flow

Bloomberg News reported in October 2018 that Robinhood had received about half of its tax income from requital for order stream. [ 68 ] The ship’s company subsequently confirmed this on its corporate web site when asked by CNBC. [ 69 ] The Wall Street Journal found that Robinhood “ appears to be taking more cash for orders than rivals, ” by up to a 60-to-1 ratio, according to its regulative filings. [ 70 ] The Financial Industry Regulatory Authority fined Robinhood $ 1.25 million in December 2019 for failing to ensure that its customers received the best monetary value for orders. All of Robinhood ‘s trades between October 2016 and November 2017 were routed to companies that paid for order flow, and the caller did not consider the price improvement which may have been obtained through early market makers. [ 71 ] Robinhood was sued in a class-action law suit in December 2020 for failing to disclose that a large dowry of its tax income relied on requital for order menstruation. [ 72 ]

security breaches

In July 2019, Robinhood admitted to storing customer passwords in cleartext and in clear form across their inner systems, according to emails it sent to the moved customers. Robinhood declined to say how many customers were affected by the mistake and claims that it did not find any tell of abuse. [ 73 ] however, in 2020, the firm acknowledged that about 2,000 Robinhood Markets accounts were compromised in the hack spree, [ clarification needed ] and that hackers siphoned off customer funds, a gestural that the attacks were more widespread than was previously known, and not forthcoming originally by Robinhood. [ 74 ] In early November 2021 the company announced that about 5 million customers had their e-mail addresses stolen by hackers via a voice phishing scheme. Another 2 million customers ‘s full names were besides taken. Three hundred customers had more extensive personal information taken. [ 75 ] It is believed that the hacker “ pompompurin ” who was behind the 2021 FBI email hack was responsible for the gap. [ 76 ]

Infinite leverage

In November 2019, a drug user on the WallStreetBets subreddit shared a bug that allowed Robinhood Gold users to borrow inexhaustible funds via betray covered calls where the shares had been bought using leverage, and the premium from the call was used to access extra leverage to buy more shares in order to sell more calls and thus on. The loophole was closed concisely thereafter and the accounts that exploited it were suspended, but not before some accounts recorded six name losses by using what WallStreetBets users dubbed the “ infinite money cheat code. ” [ 77 ] [ 78 ] [ 79 ]

Outages

On Monday, March 2, 2020, Robinhood suffered a systemwide, all-day outage during the largest daily point acquire in the Dow Jones ‘ history, preventing users from performing most actions on the platform, including open and conclude positions. [ 80 ] During this outage the S & P 500 climbed more than 4.6 percentage. [ 81 ] Robinhood users postulated that the outage was the leave of a coding error regarding jump year handling for Saturday, February 29, 2020. Robinhood denied these claims. [ 82 ] Robinhood said that they will offer compensation on a individual footing. [ 83 ] Robinhood experienced another major systemwide outage on March 9. [ 84 ] Robinhood is presently facing three lawsuits due to outages in March 2020. [ 85 ]

Read more:   Improved central services let teachers focus on the classroom

suicide of Alexander E. Kearns

“ Alex Kearns ” redirects here. For the photographer, see Alex Cearns Robinhood faced controversy in June 2020 after University of Nebraska student Alexander E. Kearns committed suicide after seeing a negative cash balance of US $ 730,000 ( equivalent to $ 764,355 in 2021 ) in his Robinhood allowance trade account. It was later discovered that this was a irregular [ clarification needed ] damaging balance wheel due to unsettled trade activity. [ 86 ] [ 87 ] In his suicide note, Kearns, who was 20 years old at the clock of his death, accused Robinhood of allowing him to pile on besides much risk. [ 88 ] In a press turn, Robinhood promised considering extra criteria and education for customers seeking horizontal surface 3 [ clarification needed ] options authority. [ 89 ] [ 90 ] [ 91 ] Kearns ‘ class filed and by and by settled a wrongful death lawsuit with the company. [ 92 ]

2020 SEC probe

On September 2, 2020, the Wall Street Journal reported that Robinhood was under SEC investigation for failing to fully disclose selling clients ‘ orders to high-speed trade firms, with a potential $ 10 million-plus fine. [ 5 ] Robinhood paid $ 65 million to settle the SEC investigation on December 17, 2020. [ 93 ]

Gamification in Massachusetts

On December 16, 2020, the Massachusetts Securities Division filed an administrative complaint alleging violation of submit securities laws by “ marketing itself to Massachusetts investors without respect for the best interests of its customers and failing to maintain the infrastructures and procedures necessary to meet the demands of its quickly growing customer base. ” [ 94 ] As a leave of their gamified interface allowing new investors to participate in advance derivatives trade, short sales, and call options, the Massachusetts Securities Division contended that Robinhood exploits novitiate investors, since these types of deal are normally considered “ out of bounds ” for new investors due to the eminent hazard involved in them. [ 95 ]

2021 short coerce

On January 28, 2021, Robinhood and other retail brokers, including Webull, [ 96 ] restricted the trade of certain stocks following an attempt by users of r/wallstreetbets subreddit to drive up their price. [ 97 ] Robinhood restricted trading in these stocks in order to meet collateral requirements at their clearinghouse, the National Securities Clearing Corporation. [ 98 ] [ 99 ] This decisiveness attracted disapprobation from internet users on the subreddit and on Twitter, [ 100 ] [ 101 ] ampere well as politicians. [ 102 ] [ 103 ] [ 104 ] The House Committee on Financial Services questioned Robinhood CEO Vlad Tenev during a hearing on February 18, 2021. [ 105 ]

Following the controversy, the app suffered an inflow of one-star reviews on the Google Play app store. [ 106 ] Google deleted at least 100,000 such reviews, calling them “ coordinated or inorganic ”. [ 107 ] [ 108 ] [ 109 ] however, after another round of negative reviews on the app dropping it to a 1.1-star rat, Google confirmed that the raw reviews do not violate Google policies and will not be removed. [ 110 ] Protesters besides showed up outside Robinhood headquarters in Menlo Park, California, at the Securities and Exchange Commission headquarters in Washington, D.C., and the New York Stock Exchange. [ 111 ] On January 28, a class-action lawsuit against Robinhood for allege market manipulation was filed in the Southern District of New York. The lawsuit alleges that the app “ purposefully, willfully, and wittingly removing the stock ‘ GME ’ from its trade chopine in the midst of an unprecedented stock ascent [ … ] deprived retail investors of the ability to invest in the open-market and manipulating the open-market. ” [ 112 ] [ 113 ] [ 114 ] Later that day, the ship’s company announced that it would reallow express buys of the stocks on January 29. [ 115 ]

References

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top