Sherman and Colleagues Request Answers on Investor Protections from Robinhood
Washington, D.C. – Today, Congressman Brad Sherman (D-Sherman Oaks), who is also Chair of the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, sent a letter to Robinhood Co-Founders and Co-CEOs, Vladimir Tenev and Baiju Bhatt, to raise a number of investor protection concerns regarding its trading platform. Congressman Sherman is joined by Reps. Bill Foster, Lauren Underwood, and Sean Casten as well as Senators Dick Durbin and Tammy Duckworth in sending this timely and important letter.
Robinhood is a tech-based brokerage firm, which has offered low fees and flashy features to attract many thousands of young retail investors to trade stocks, options, and other securities on their phones through the Robinhood platform. Robinhood has grown over the past several years but has also attracted many new users during this historic period of stock market volatility. In a number of recent instances, Robinhood seems to have failed in its responsibly to protect the investors who trade on its platform. Recently, press reported on the tragic death of 20-year-old Alexander Kearns, of Plainfield, Illinois. Heartbreakingly, Mr. Kearns suicide seems to have been related to his Robinhood account displaying misleading information to indicate a negative balance of $730,000.
In a June 19 statement, Robhinhood indicated a number of steps it plans to take to improve its platform and its offering of investor education materials. However, it remains to be seen whether these changes will do nearly enough to provide its users adequate protection and make them aware of the financial risks that they may be engaging in. Therefore, this letter asks a number of important questions regarding the current business practices of Robinhood and what new protections will be put in place moving forward.
View the full text of the letter here.