Robinhood’s exchanges with Senator Warren preview congressional scrutiny.
Robinhood has responded Long list of questions Senator Elizabeth Warren, a Democrat from Massachusetts, about her business practices, and what went wrong during the height of the so-called meme stock craze. Dealbook newspaper The broker’s 195-page response got its first look Wednesday.
Questions and responses indicate that Ms. Warren is focused as the Senate Banking Committee, of which she is a member, investigates the fintech company and pushes for securities regulation. Instantly, back-and-forth serves as a preview of possible topics House hearing on Thursday On the market frenzy, which will include Vlad Tenev, chief executive of Robinhood.
The letter from Robinhood to Ms. Warren reiterated the company’s previous obstacles that forced it Halt trading in some stocks During frenzied trading in GameStop, AMC and others.
When pressured by Ms. Warren, Robinhood said it “does not share customer data with firms such as Securities Securities”, although it was not involved in those customer orders. Asked how much money it makes from securities securities and other financial firms, Robinhood noted its public disclosures Payment for order flow Contracts The complex practice through which Robinhood makes its money.
A Robinhood spokesperson told the Times, “Robinhood does not receive any money from the security other than the rebate received through payment for order flow, which is publicly disclosed.”
Kenneth C., head of hedge fund Citadel. Griffin will also testify at the House hearing on Thursday.
Robinhood also responded to Ms. Warren’s inquiry about the use of mandatory arbitration agreements, which could waive the user’s right to take the company to court. Robinhood, which said it “is open to reviewing its use of arbitration,” said that only one of its 2020 cases had a final verdict by an arbitrator, with a $ 0 award.
“Robinhood promised to democratize the trade, but hid information about its privilege to change the rules by cutting trades without notice – and about customers’ inability to reach the courts if they believed they would Has been cheated – behind dozens of legal pages, ”said Ms. Warren. She could pressurize the Securities and Exchange Commission to ban forced arbitration practices, investigate Robinhood’s relationship with Social Securities, explore capital requirements for brokerage firms, and market manipulation on its own Can clarify the rules.
“I’m going to push regulators to use the full range of their regulatory tools, especially for small investors to ensure fair operation of our markets,” Ms Warren said.