Robinhood Has 'Done a Great Thing for Young Investors'
Robinhood is reportedly facing an SEC investigation over its relationships with high-speed trading firms.
The Securities and Exchange Commission is investigating Robinhood over its ties to high-speed trading firms, the Wall Street Journal reported on Wednesday.
The SEC is focusing on whether Robinhood properly disclosed to customers that its orders were being sold to high-speed trading firms, and whether that lack of disclosure amounts to civil fraud.
The investigation is reportedly in an advanced stage, and if Robinhood is found liable, it may have to pay a fine as high as $10 million if it agrees to settle with the SEC, according to the WSJ. The two sides haven't formally negotiated a settlement, and a deal is unlikely to be reached this month.
The app offers commission-free stock trades, and has seen considerable growth in recent years and has become particularly popular during the COVID-19 pandemic.
The company said it made $180 million in the second quarter, compared to $91 million in the first quarter. Robinhood reported 4.31 million daily active trades in June. The majority of Robinhood’s revenue comes from options trading, which is viewed as risky particularly for amateur investors.
Meanwhile, take a look at Robinhood's most-sold stocks in August, courtesy of Jonas Elmerraji of Trend Playbook.
You can follow Katherine Ross on Twitter at @byKatherineRoss.
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