CPRX - HOOD Stock: Is the Robinhood 'Free Share of Stock' Promotion in Danger?
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Robinhood (NASDAQ:HOOD) stock is catching flak on Wednesday as the company faces scrutiny for its “free share of stock” promotions.
For those that don’t know, Robinhood offers up free shares of stock to users for certain tasks. That includes when first signing up for an account, as well as when they refer friends, alongside other actions.
However, companies are starting to push back against this practice as it costs them money. That due to proxy statements these companies have to file concerning those free shares of stock. Some of them are even reaching out to the U.S. Securities and Exchange Commission (SEC) for help.
Patrick McEnan, CEO of Catalyst Pharmaceuticals (NASDAQ:CPRX), said the following in an SEC letter from June obtained by The Wall Street Journal.
“Catalyst has become aware that Robinhood has been giving away shares of Catalyst’s common stock at no charge as part of its promotional program. Catalyst believes that there are likely numerous companies facing this same issue, and that the costs of distributing materials to small stockholders under these circumstances is onerous and unreasonable.”
A previous rule from the SEC stopped the reimbursement costs that companies had to pay but only affected the New York Stock Exchange. That means that Robinhood isn’t under that rule. However, companies are now calling for another similar rule that would keep them from paying for those proxy statements.
Robinhood doesn’t appear too bothered by the idea of a wider-spread rule covering proxy statements. A spokesman for the company said such a change wouldn’t “impact us significantly.”
HOOD stock was down 2.1% as of Wednesday morning.
Investors looking for more stock market news today are in luck!
InvestorPlace offers up the latest stock market news that traders need to know about today. That includes why NTS stocks are on the rise, what to know about Pop Culture Group (NASDAQ:CPOP) surging, as well as price increase new pumping up shares of Taiwan Semiconductor (NYSE:TSM) stock. You can find all of that at the links below!
More Wednesday Stock Market News
- NFT Stocks: Why BBIG, TKAT and JFIN Stocks Are Minting Gains Today
- CPOP Stock: 5 Things to Know About Penny Stock Pop Culture Group as Shares Surge Today
- TSM Stock: The Taiwan Semiconductor Price Hike News Giving Shares a Lift Today
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
More From InvestorPlace
Stock Prodigy Who Found NIO at $2… Says Buy THIS Now
Analyst Who Found Microsoft at $0.38 Names #1 Pick for the AI Boom
America’s #1 EV Stock Still Flying Under the Radar
The post HOOD Stock: Is the Robinhood ‘Free Share of Stock’ Promotion in Danger? appeared first on InvestorPlace.