Florida’s top prosecutor is seeking a diverse range of documents from the trading firm.
The Robinhood trading app is under investigation by Attorney General James Uthmeier for what the state’s top prosecutor says are allegations of violating the Florida Deceptive and Unfair Practices Act.
Uthmeier said in a news release that Robinhood is allegedly promoting its platform as the least expensive for acquiring cryptocurrency. Uthmeier said that’s not true.
“Crypto is a vital component of Florida’s financial future, and President Donald Trump’s efforts to advance the crypto market will make America stronger and wealthier. When consumers buy and sell crypto assets, they deserve transparency in their transactions,” Uthmeier said. “Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive.”
Uthmeier’s Office has issued subpoenas for Robinhood internal documents. The company is headquartered in Menlo Park, California.
Robinhood has claimed that its platform is “the lowest cost on average” when it comes to cryptocurrency trading and says customers can get “the most crypto for your money.”
Uthmeier’s Office contends that evidence shows Robinhood can be more expensive than trading on other platforms. The news release also said “third parties that pay Robinhood for order flow might have to charge less favorable prices to the Robinhood customers they trade with to be profitable.”
Robinhood generates revenue channeling customer trades to third-party firms that pay Robinhood for the opportunity to take the opposite side of the trades for their own customers. It’s a process called payment for order flow (PFOF).
“There is evidence that trading on Robinhood is actually more expensive than trading on competing platforms due to its PFOF structure versus competitors offering all-in trading costs,” the news release said.
Uthmeier’s subpoena is seeking a plethora of documents ranging from the reporting structure for the company, names of current and former employees of the marketing department and trading platform and those determining commissions and fees, advertising documents, PFOF practices, training materials, documents relating to Robinhood competitors, cryptocurrency trading data, trades by users in Florida, and other material.
Robinhood has until July 31 to respond to the subpoena.
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