The Financial Industry Regulatory Authority has been known to fine brokerages in the past for failing to report such transactions, including Deutsche Bank’s U.S. securities branch and Merrill Lynch. Regulatory filings eventually revealed that retail investors with Robinhood held a total of $802.5 million in fractional shares. These filings were divulged at the end of 2020, though Reuters was not able to verify just how many trades Robinhood failed to report.
When Reuters presented data to James Angel, finance professor at Georgetown University who specialises in market structure, he said:
Should they deserve to get a parking ticket for it? Yes. Should it be painful enough that they don’t do it again? Yes. Should it be so overwhelming that it puts them out of business? Heck no.
This reporting lapse was revealed just as the company was seen to be expanding significantly and at a rapid pace, with legions of new retail traders beginning to enter the market. Just last month, Robinhood filed for an initial public offering that Reuters has said to be valued at around $30 billion.
Earlier in March, Robinhood filed confidentially for initial public offering (IPO). The online brokerage submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission for IPO.
Robinhood recently appointed former Google executive Aparna Chennapragada as Chief Product Officer.
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