Robinhood to restrict users who 'flip' IPO shares


FILE PHOTO: The Robinhood App is displayed on a screen in this photo illustration January 29, 2021. REUTERS/Brendan McDermid/Illustration

(Reuters) - Online brokerage Robinhood Markets Inc, which recently launched an offering for retail investors to buy shares in initial public offerings, is encouraging users not to sell shares within the first 30 days of offerings.

On its website and in a recent note to customers, Robinhood warned that investors who sell or "flip" their IPO shares could be restricted from participating in future IPO deals for two months.

"We won't prevent you from selling shares you get through the IPO Access program," the company said https://robinhood.com/us/en/support/articles/ipo-access on its website.

"However, if you sell IPO shares within 30 days of the IPO, it's considered "flipping" and you'll be restricted from participating in IPOs for 60 days."

Rival fintech Social Finance (SoFi), which also recently launched an IPO platform for retail customers, enforces similar restrictions by collecting fines from "flippers" or customers who sell their shares to take advantage of first-day pops.

"Issuing companies and their underwriters often try to avoid IPO stock flipping. Flipping could lead us to offer fewer IPOs in the future," Robinhood, which launched the offering in May, said on its website.

Robinhood's new IPO platform is available to all customers, without any account limit restrictions. In May, FIGS Inc, which manufactures medical scrubs, became the first company to be listed on Robinhood's IPO Access platform.

The brokerage, which is soon expected to unveil paperwork for its own highly-anticipated stock market listing, will offer its IPO shares to retail customers on the platform, sources told Reuters in May.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Anirban Sen and Ramakrishnan M.)

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

   

Next In Tech News

Young TikTok star shot in California movie theatre dies
VW boss: Data to be key issue for future of self-driving cars
Anti-vax app squares off with Google, Apple over misinformation
Smart buildings: Cohesion CEO on the office of the future
Standing up to ransomware
Renault locks in lithium supply from Vulcan Energy in five-year deal
eSports and mental health: Balancing drive to win with protecting players
Catching fire: AI is helping scarce firefighters better predict blazes
Square reports over 143% jump in revenue in Q2
Square to buy Afterpay for $29 billion as buy now, pay later booms

Stories You'll Enjoy


Vouchers