What a week for Robinhood: Robinhood Financial LLC filed publicly for its initial public offering, and plans to allocate between 20 percent and 35 percent of its IPO shares for retail customers. The company isn’t without its regulatory challenges, however. Earlier in the week, the Financial Industry Regulatory Authority said that Robinhood will pay a fine of nearly $70 million to settle allegations that it misled customers, didn’t supervise technology that locked users out of their accounts, had issues with technology that automated the opening of new accounts or trading strategies and updated clients about their balances. Robinhood didn’t admit guilt or deny the claims, while Finra enforcement chief Jessica Hopper said that “innovation can’t be at the cost of creating compliance and supervision systems.”
It could be getting moderately better to work at a financial regulator: First, one chapter of the controversy at the Public Company Accounting Oversight Board came to a close, with former Securities and Exchange Commission Chairman Harvey Pitt wrapping up his report that alleged an “environment of fear and distrust” at the auditing regulator as well as organizational dysfunction. Current SEC Chairman Gary Gensler ousted William Duhnke last month and is in the process of replacing the entire five-member board, and the agency is investigating Duhnke over his handling of complaints.
A similar story is underway at the Federal Housing Finance Agency. Laura Wertheimer, the inspector general overseeing FHFA, stepped down two months after a watchdog report alleged that she abused her authority, retaliated against employees and refused to cooperate with an investigation into her conduct.
Policymakers are trying to figure out how to deal with housing relief: The Supreme Court declined to lift the national moratorium on evictions for tenants impacted by the coronavirus pandemic, following a May decision by a federal judge in Washington that the Centers for Disease Control and Prevention’s moratorium was legally unsupportable. Earlier, the CDC extended the eviction moratorium for one more month through July; it was previously set to expire last week.
The Fed is looking at the housing market as well. Eric Rosengren, president of the Federal Reserve Bank of Boston, said that the housing market should be considered as the central bank weighs continued monetary support to the economy, noting that the economy can’t afford a “boom and bust cycle” in the market. Rosengren said that reaching a 2 percent inflation target can’t be sustainable with a boom and bust real estate cycle.
Wall Street’s cop on the block gets a heavy hitter: The Securities and Exchange Commission named New Jersey Attorney General Gurbir Grewal as head of the agency’s enforcement division, a post previously held by corporate defense lawyer Alex Oh, who quit after less than a week on the job after a federal judge reprimanded her and others for defending Exxon Mobil Corp. in a lawsuit filed by Indonesian villagers. In New Jersey, Grewal led the state’s securities bureau and filed dozens of lawsuits against former President Donald Trump’s administration, ranging from loosened environmental protections to the Affordable Care Act.
Jobs gain in June: The Labor Department’s jobs report showed that nonfarm payrolls rose 850,000 in June, the biggest monthly rise since August, with the bulk of those gains coming from the leisure and hospitality sector. The unemployment rate rose to 5.9 percent.
