Robinhood Hid Certain Stock Trades From its Public Feed; Seeks More Credit Ahead of IPO
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Robinhood, the online trading platform, is working to raise more funds through bank loans ahead of its initial public offering (IPO), Bloomberg reports.
The report notes that the retain trading company is holding talks with lenders to increase revolving credit lines as it looks to bolster its liquidity. Robinhood’s credit lines include $600 million from major US banks, namely Goldman Sachs, JP Morgan and Morgan Stanley.
Two months ago, Robinhood raised new debt and sold $3.4 billion in equity to comply with a margin call from the industry’s clearinghouse amid the WSB frenzy.
The company is preparing to go public after it had filed confidentially for an IPO last month. According to Reuters, Robinhood is seeking a valuation of about $30 billion.
In separate news, Reuters reports that Robinhood failed to disclose some traders to a public data feed. This way, the online trading company has likely breached regulations set by Financial Industry Regulatory Authority (FINRA) and U.S. Securities and Exchange Commission (SEC).
The report adds that Robinhood didn’t disclose all fractional shares, which are designed to allow investors to buy a slice of a share instead of the one full stock.
“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,” said James Angel, a finance professor at Georgetown University.
Although the company launched the fractional service in December 2019, it only began publicly reporting trade executions the week of January 25, 2021.
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