Robinhood CEO Vlad Tenev’s phone was seized by federal attorneys in one of the stock trading apps company’s many legal battles, it revealed in its initial public offering filing Thursday.
In a section outlining the legal risks of investigations and subpoenas, the company noted that “the USAO executed a related search warrant to obtain Mr. Tenev’s cell phone.” Here, “USAO” refers to the United States Attorney’s Office for the Northern District of California, which was investigating Robinhood’s restrictions on trading during the spate of meme actions surrounding GameStop and other actions in early 2000. this year.
The company faces or has faced dozens of proposed class action lawsuits, as well as examinations or investigations by regulators, state attorneys general, the SEC, FINRA, and the US Department of Justice. The SEC filing notes that the company “ has learned of approximately 50 putative class action lawsuits… related to the trade restrictions of early 2021 ”.
Robinhood restricted the purchase of “meme stocks” like GameStop and AMC in January because the company did not have the capital required by regulators to cover the requested trading volume. The company eventually tapped $ 500 million through its credit lines and raised $ 1 billion overnight to lift business restrictions.
Investors have called the entire episode unfair and illegal in court records previously reviewed by CNBC.
Tenev has received requests for information and requests for testimony, and Robinhood said the incident has led to negative media attention and widespread customer dissatisfaction.
The company admitted that these numerous litigation battles are “costly and time-consuming” and could damage its reputation and finances. But due to the preliminary nature of all these proceedings, the company wrote, “at this time it cannot estimate the probability or magnitude of possible losses related to these matters.”
The company also acknowledged in its SEC filing that it had received inquiries related to employee trading.
The initial public offering filing comes a day after news that Robinhood would have to pay a $ 70 million fine to FINRA for its system-wide disruptions and deceptive business and communication practices.