Robinhood Markets Inc. has hired two officials from its front-line regulator, Finra, as the fast-growing brokerage looks to move beyond a series of compliance problems and prepares for an expected initial public offering later this year.
Josh Drobnyk joined the firm this week as vice president of corporate relations and communications, while Anthony Cavallaro will start early next month as head of regulatory services and fraud oversight for its Robinhood Financial subsidiary, the company said in a statement Thursday. Both come from the Financial Industry Regulatory Authority, the industry-funded brokerage watchdog.
With its user-friendly smartphone app and commission-free trades, Robinhood has seen an explosion in popularity during the coronavirus pandemic, attracting scores of neophyte investors into the markets. Robinhood’s rapid growth — it counts more than 13 million customers — has put the company in the crosshairs of lawmakers as well as state and federal regulators, who have accused the firm of not doing enough to protect its less-sophisticated clientele.
Robinhood opened a Washington office last year to focus on fixing its regulatory and political problems. The company recently paid $65 million to resolve a Securities and Exchange Commission case that alleged it failed to properly inform clients that their orders were sold to high-frequency traders and other firms.
Issues have continued to crop up. The brokerage is also being investigated by Finra and the SEC over high-profile trading outages last year, and Massachusetts securities regulators filed a complaint against the firm last month, alleging violations of its obligations to put customers’ interests first.
Drobnyk, who was senior vice president for communications at Finra, is in charge of corporate and public policy communications for Robinhood. He previously worked in the Obama Administration as a Treasury Department spokesman and later as deputy chief of staff to Secretary Jack Lew.
Cavallaro spent more than 12 years at Finra, most recently in its Office of Fraud Detection and Market Intelligence. At Robinhood, he will oversee regulatory examinations, inquiries and complaints, as well as work with the brokerage’s surveillance teams.
Robinhood is aiming to go public as soon as this quarter, Bloomberg News has reported. It was valued at $11.7 billion in a September funding round.
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