Robinhood confidentially files for IPO

Robinhood confidentially files for IPO
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Robinhood, the zero-commission online trading app, confidentially filed for an IPO on Monday, about a month after becoming embroiled in controversy for its decision to block access to certain companies and being accused of failure to communicate with its customers.

The company confirmed the filing in a blog post on its website after multiple news outlets, including CNN, reported the development.

“Robinhood Markets, Inc. has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”) relating to the proposed initial public offering of its common stock. The number of shares to be offered and the price range for the proposed offering have not yet been determined,” the company wrote.

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Confidentially filing for an IPO allows companies to file a registration statement with the SEC without immediately revealing their financial details. The company will eventually have to divulge that information in order for investors to evaluate the company’s growth and risks.

Robinhood fell under heavy scrutiny and criticism in February after it blocked users from purchasing shares of GameStop and AMC, the prices of which had skyrocketed after users on the Reddit group “r/WallStreetBets” bought large amounts of shares from both companies in a short squeeze.

Robinhood CEO Vlad Tenev testified in front of the House Financial Services Committee in February regarding the GameStop trading frenzy. During the hearing, Tenev claimed that his company blocked purchases in order to protect their customers from losses and also to allow the company to raise the funds to cover higher collateral requirements set by clearing houses and internal market regulators.

Lawmakers on both sides of the aisle condemned Tenev for his company's apparent failure to communicate with its users

“Your trading restrictions came out of the blue and your communication was not clear,” Rep. Carolyn MaloneyCarolyn MaloneyDOJ tells former Trump officials they can testify in Jan. 6 investigations: report Overnight Energy: Democrats request interview with Exxon lobbyist after undercover tapes | Biden EPA to reconsider Trump rollback on power plant pollution in 2022 | How climate change and human beings influence wildfires Democrats request interview with Exxon lobbyist after undercover tapes MORE (D-N.Y.) said, adding that Robinhood customers had “the rug pulled out from them at the last minute.”

The company was also recently sued in February by the family of a 20-year-old college student who committed suicide after he believed he had accrued almost $750,000 in losses. Alex Kearns' family are accusing Robinhood of wrongful death, negligent infliction of emotional distress and unfair business practices after Kearns was unable to get coherent responses from the company regarding a misleading investment alert.