Regulators are also probing Robinhood employees’ stock trades that occurred around the time of the company’s controversial stock restrictions imposed in January amid the Reddit market turmoil.
Robinhood said the FINRA investigation is related to the “non-registration status” of both Tenev and co-founder Baiju Bhatt, who now serves as chief creative officer.
“Robinhood is evaluating this matter and intends to cooperate with the investigation,” the company said in the filing.
FINRA declined to comment on the matter, noting that its investigations are confidential. Robinhood did not respond to a request for comment.
“Robinhood is facing lots of scrutiny in the run up to its IPO, and regulators are poring through its operations and structure,” James Tierney, an assistant professor of law at the University of Nebraska College of Law, said in an email.
Tierney, who previously worked at the SEC on FINRA registration matters, said it’s not surprising this scrutiny “extends to Tenev’s registration status, given his prominent role as the public face” of the company.
Should Tenev be FINRA-registered?
The FINRA investigation comes after Senator Elizabeth Warren, in a February statement to Fintech Zoom Business, called on regulators to examine whether executives like Tenev “should be licensed and trained on market rules and risks.”
Tenev is the CEO of Robinhood Markets, the parent company that is not registered with FINRA. (Robinhood Markets owns a broker-dealer and a clearing broker.)
The CEO of a parent company that owns a broker-dealer does not necessarily need to be registered.
At the time of the initial Fintech Zoom report, Robinhood told Fintech Zoom Business that Tenev does not directly oversee the FINRA-registered managers of the broker-dealer or the clearing broker, but declined to say who does.
Some experts expressed alarm at the fact that Tenev is not registered with FINRA, while others said it may not be a problem.
Latest run-in with FINRA
The FINRA licensing investigation is just Robinhood’s latest run-in with the regulator.
Robinhood neither admitted to nor denied the charges.