Among other things, regulators are probing how the app “displays cash and buying power to customers and its options trading approval processes,” according to the filing, which was first reported by the Wall Street Journal.
The company noted it is being sued by the family of Alex Kearns, a 20-year-old who died by suicide last summer after mistakenly concluding his options trading on the app had left him with a negative balance of about $730,000. The family contends “misleading communications” from Robinhood contributed to his death.
Lawmakers raised the event with Robinhood CEO Vlad Tenev at a House Financial Services Committee hearing earlier this month focused on the recent surge in meme stocks driven in part by Robinhood users. Tenev, testifying remotely, said Kearns’s death was “deeply troubling to me and to the entire company. And we have vowed to take a series of steps, very aggressive steps, to make our options products safer for our customers.”
Meanwhile, attorneys in the Justice Department’s criminal division are conducting a wide-ranging investigation into possible market manipulation in the retail trading frenzy, The Washington Post reported earlier this month. The prosecutors issued a subpoena to Robinhood as part of that investigation, a person familiar with the matter said.