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Robinhood Financial, LLC, a popular US-based commission-free stock and crypto investing platform, recently announced that it has agreed to a $600 million buyback of seized Sam Bankman-Fried HOOD stakes from the US Marshal Service. The Securities and Exchange Commission (SEC) had seized the shares due to alleged insider trading. With this buyback, Robinhood is taking a big step in demonstrating its commitment to protecting its customers from being victimized by suspect market practices.
The announcement comes shortly after the SEC charged Bankman-Fried and Robinhood with being involved in insider trading. The Justice Department alleged that Bankman-Fried had illegally traded stocks of various companies like Nikola, Dogecoin, and Clovis Oncology in front of customers, which may have generated more than $26 million in profits for Bankman-Fried.
The SEC stated that “the settlement provides for the return of more than $600 million in securities and cash that Sam Bankman-Fried obtained as a result of alleged insider trading activity, and Robinhood’s payment of a $65 million penalty”.
Although Bankman-Fried has not been charged with a crime, he has ceased operations at the brokerage and his HOOD wallet is no longer open for trading. With this buyback, Robinhood is taking a proactive role in protecting its customers from further abuse.