Robinhood plans $35bn IPO as crypto arm predicts $30m probe settlement
Retail trading app Robinhood has revealed plans to raise $2.3 billion in an initial public offering (IPO), with shares selling between $38 and $42.
Those figures would mean a valuation of between $27 billion and $35 billion, placing the trading app in the upper third of the S&P 500.
Robinhood’s revenue grew by 245% to $959 million last year on the back of increased usage figures and its central role in an explosion of retail trading.
That prominence has led to the firm becoming the centre of a number of controversial investigations and allegations.
Last month, the US Financial Industry Regulatory Authority (FINRA) levelled a $57 million penalty against Robinhood.
The sanctions represent the largest financial penalty ever ordered by FINRA, which it says reflects “the scope and seriousness of the violations”.
The regulator found issues with the way Robinhood portrayed information to customers, the methods through which it approved options trading, and the technology it uses to provide broker-dealer services.
This week, the fintech’s cryptocurrency arm said it expects to pay $30 million to settle a New York-based probe into its cybersecurity and money laundering practices.
The payout comes as part of a proposed deal to cease an investigation by watchdogs into its security procedures.
Robinhood initially told investors earlier this month it would be looking to pay around $10 million to the New York Department of Financial Services (NYDFS).
In its filings for going public, Robinhood said New York regulators alleged “certain deficiencies in our policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in our application development security”.
So far, Robinhood has also paid $65 million to the securities and exchange commission (SEC) over deal disclosures. The SEC found the trading app failed to fully disclose its tactic of selling orders to high-speed trading firms.