August 17, 2021
prima91 – inventory.adobe.com
Robinhood Monetary, confronted with elevated scrutiny of its zero-commission platform and potential regulatory reforms gutting its payment-for-order-flow enterprise mannequin, tripled its lobbying bills within the first half of 2021, in comparison with the complete prior yr, based on knowledge compiled by OpenSecrets.org.
The self-directed investor platform paid $880,000 in lobbying expenditures between January and June 30, in comparison with $275,000 for all of 2020, based on the location, which is nonprofit and nonpartisan. (Robinhood didn’t register federal lobbyists till 2020 as corporations should spend greater than $13,000 earlier than they’re required to take action.)
Robinhood began in the summertime of 2020 hiring high-power Capitol Hill seasoned attorneys, who’re among the many 16 names now registered as its lobbyists for the corporate.
In August 2020, the corporate introduced its rent of Lucas Moskowitz, who had most just lately been a associate on the legislation agency WilmerHale, however had beforehand served in a number of roles with the U.S. Securities and Trade Fee, together with because the company’s Chief of Employees below then Chairman Jay Clayton and as a senior counsel within the Division of Enforcement, based on a Robinhood press launch.
Moskowitz additionally served federal legislators, as chief investigative counsel for the Senate Banking Committee and counsel for the Home Monetary Providers Committee.
In November final yr, Robinhood employed Beth Zorc, who had most just lately been senior vice chairman and head of public coverage for Wells Fargo, based on her LinkedIn web page. Previous to that, Zorc additionally had labored as senior counsel on Capitol Hill for a similar Senate and Home committees as Moskowitz.
Bolstering its Washington-centric lobbying efforts made sense for Robinhood, which has confronted a storm of legislative, litigated, and regulatory scrutiny previously yr, together with a $70 million effective imposed in June by the Monetary Business Regulatory Authority for supervisory failures.
It was additionally the goal of SEC Chairman Gary Gensler, who remarked a number of occasions in the course of the summer time about potential regulatory reform over the self-directed firm’s gamification and cost for order circulation (PFOF) practices. PFOF permits Robinhood and different broker-dealers to obtain charges for trades routed via a clearing agency by that clearing agency.
Since Robinhood started its lobbying push, legislative proposals banning PFOF practices haven’t disappeared however their prospects have dimmed. On July 30, the Home Monetary Providers Committee accepted a invoice that didn’t outright ban PFOF, as some investor advocates had hoped, however proposed a congressional research of the apply which might assist lawmakers sooner or later “think about banning or limiting” it.
A spokesman for Robinhood declined to touch upon this story.
Robinhood, which has a market cap of $38.6 billion at press time, spent its federal lobbying {dollars} making an attempt to sway lawmakers about subjects together with taxes on securities buying and selling, market infrastructure, market volatility, and real-time settlement, based on its disclosures filed with the U.S. Senate, from which OpenSecrets collected its knowledge.
As compared, the lobbying spend of Charles Schwab, a a lot bigger brokerage with a market cap of $135.eight billion at press time, outpaced that of Robinhood, reaching $1.35 million for the primary half of this yr. That’s on tempo to finish barely increased than $2.69 million logged for all of 2020 and contains expenditures by TD Ameritrade, which it acquired in October, based on Open Secrets and techniques. Schwab, which additionally has a self-directed platform, identifies PFOF among the many points on which its lobbyists are targeted in its most up-to-date disclosures filed with the Senate.
Regulatory and lawmakers’ scrutiny of order circulation funds seems to concern some shareholders of Robinhood.
The corporate, which accomplished its preliminary public providing July 29, had 1,318 ‘inquiries,’ or questions that shareholders can file via the corporate’s SAY app prematurely of its Wednesday-scheduled second quarter earnings name. Fee for order circulation surfaced in 29 of the questions by press time.
“What’s subsequent for Robinhood? If PFOF is regulated, what are you able to do?” one person requested in a query that was shared by 42,500 others.