Robinhood Markets Inc, the retail trading app, is to allocate 35% of its forthcoming to IPO to users of its platform, the Wall Street Journal reported today.
In a piece of slick marketing, people will have to sign up to the app to apply for shares.
Robinhood has been at the centre of the memestock tide, which has seen retail investors use social media apps such as Reddit’s r/wallstreetbets to rout hedge funds shorting companies such as GameStop, AMC and Blackberry.
The app, however, has never been far from controversy for its routing of orders through market makers and earning commission on these ‘order flows’ plus its encouragement of users to trade frequently.
Only this week, the firm was told to pay US$70mln by US financial regulator FINRA, comprising a fine and compensation to customers for "systemic supervisory failures and significant harm".
FINRA said it was its largest penalty yet and reflected “The widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm's systems outages in March 2020, and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so."
One investor, Alex Kearns, committed suicide after his account showed a deficit of more than US$730,000 when he was in credit to the tune of US$16,000.
Reports have suggested that Robinhood will be valued at US$40bn when it lists this month.