Robinhood app fined $70 million for harming 'millions' via misleading info, outages - KSL.com

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1. Robinhood app fined $70 million for harming 'millions' via misleading info, outages  KSL.com
2. Robinhood to pay $70 million fine after causing 'widespread and significant harm' to customers  CNBC
3. Robinhood trading app hit with $70M penalty for 'misleading' customers  PC Gamer
4. Robinhood ordered to pay $70M for 'significant harm' to consumers  AppleInsider
5. Robinhood to pay $70 million for outages and misleading customers, the largest-ever FINRA penalty  CNBC
6. View Full Coverage on Google News

Robinhood app fined $70 million for harming 'millions' via misleading info, outages - KSL.com
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Stock futures are flat as S&P 500 sits at record, Wall Street set to kick off second half of 2021 - CNBC

U.S. stock futures were steady in overnight trading on Wednesday as investors gear up for the second half of 2021.

Dow futures rose about 50 points. S&P 500 futures gained 0.15% and Nasdaq 100 futures rose 0.05%.

On Wednesday, the Dow Jones Industrial Average rose 210 points, helped by a 2.7% pop in Walmart. The S&P 500 registered a gain of 0.13% to close at a fresh record of 4,297.50.

The Nasdaq Composite was the relative underperformer, dipping 0.2% as Facebook, Amazon, Netflix and Google-parent Alphabet closed lower.

The major averages closed out a strong first half of 2021 and second quarter on Wednesday.

For the year, the Dow is up 12.7%, hovering about 1.7% below its all-time high. The S&P 500 rallied 14.4% in the first half of 2021 and the technology-heavy Nasdaq Composite rose 12.5%.

The S&P 500 notched its fifth positive month in a row, rising 2.2% in June. The broad index also posted its best first half since 2019.

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"Better news on Covid, vaccinations, re-openings, economic growth, and earnings fueled the advance.  Nearly equal gains were achieved in both quarters by a rotation in leadership allowing broad participation," Leuthold Group chief investment strategist Jim Paulsen told CNBC.

The Russell 2000 rose more than 17% in the first six months of the year amid a strong rotation into value stocks as the economy reopens from the Covid-19 pandemic.

"Economic growth will likely stay strong in the balance of 2021 and the question will be how much inflation fears return, how much bond yields potentially resume their advance, and whether and how aggressively the Federal Reserve's policy chatter becomes more hawkish," Paulsen said.

"If inflation fears do calm further and bond yields remain lower for longer, expect growth and technology stocks to continue leading the stock market higher. However, should strong economic growth aggravate inflationary worries and again force bond yields higher, correction fears may intensify, and leadership should be centered among cyclical stock sectors, smaller cap stocks and even international stocks," he added.

Strong first halves for the stock market historically bode well for the remainder of the year. Whenever there has been a double-digit gain in the first half, the Dow and S&P 500 have never ended that year with an annual decline, according to Refinitiv data going back to 1950.

The latest data on weekly jobless claims will be released Thursday at 8:30 a.m. ET. Economists polled by Dow Jones are expecting initial claims for unemployment totaled 390,000 last week, after totaling 411,000 for the week ended June 19.

The unemployment data comes one day ahead of Friday's closely-watched jobs report. Economists expect 683,000 jobs were added in June, according to a Dow Jones survey.

Walgreens Boots Alliance posts quarterly results before the bell on Thursday.

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Stock futures are flat as S&P 500 sits at record, Wall Street set to kick off second half of 2021 - CNBC
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After Losing China, Uber’s Stake in DiDi Reaps $8 Billion in IPO - Yahoo Finance

(Bloomberg) --

Five years ago, Uber Technologies Inc. bowed out of the world’s second-largest economy by selling its China business to rival DiDi Global Inc. in exchange for a stake in the company. Now, the U.S. ride-hailing company is cashing in on its trade.

Didi, the biggest ride-hailing company in China, raised about $4.4 billion in its U.S. initial public offering on Tuesday and sold more shares than it originally planned. Didi’s stock closed up 1% at $14.14 on Wednesday, giving the company a market value of about $68 billion.

That makes Uber’s current 12% stake worth about $8.1 billion. Didi’s public offering is the second largest U.S. listing by a Chinese company, behind Alibaba Group Holding Ltd.’s $25 billion debut in 2014, according to data compiled by Bloomberg.

Founded in 2012 by Cheng Wei, Didi emerged as Uber’s biggest rival in China at a time the San Francisco-based company was vying to expand globally. In their battle for market share, Uber burned through billions of dollars before stopping its losses by selling Uber China to Didi, known as Didi Chuxing at the time. The deal left Uber with a 20% stake in its competitor. Uber has been selling some of its shares in Didi in the run-up to the IPO, reducing its holding from about 14% in the first quarter.

Though Didi is dominant in China, momentum in the region is beginning to slow. The company plans to use the IPO funds to invest in technology, increase its presence in some international markets and introduce new products, according to its U.S. filings.

More stories like this are available on bloomberg.com

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Amazon wants FTC Chair Lina Khan recused from all its cases - CNN

The e-commerce giant filed a petition to the FTC on Wednesday suggesting that Khan -- an outspoken tech critic who has played a key role in driving antitrust scrutiny of the industry and Amazon in particular -- lacks objectivity, according to a copy obtained by CNN Business.

Khan, the petition reads, "has on numerous occasions argued that Amazon is guilty of antitrust violations and should be broken up. These statements convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon's antitrust culpability as well as about the ultimate issue of culpability itself."

The FTC didn't immediately respond to a request for comment.

Amazon's decision to file the petition highlights the potential regulatory threat that the company now faces as momentum for tougher antitrust enforcement spreads throughout Washington. Khan is set to oversee major lawsuits at the FTC, such as the agency's effort to break up Facebook and, potentially, Amazon's $8.45 billion acquisition of movie studio MGM.

In 2017, Khan published an influential paper in the Yale Law Journal highlighting alleged antitrust violations by Amazon. The paper is widely credited with having jump-started a national debate about US antitrust law and whether it is sufficient to hold Big Tech platforms accountable.

Khan was also a leading member of a House investigation into the tech industry, a probe that resulted in a landmark report last summer finding that Amazon, Apple, Facebook and Google hold monopoly power and have abused it at the expense of fair competition. The report has sparked six bills in the House aimed at breaking up large tech platforms and imposing new restrictions on them.

In a statement after the petition was filed, an Amazon spokesperson said the company welcomed close scrutiny.

"However, even large companies have the right to an impartial investigation," the spokesperson said. "Chair Khan's body of work and public statements demonstrate that she has prejudged the outcome of matters the FTC may examine during her term and, under established law, preclude her from participating in such matters."

The fate of Amazon's petition likely hinges on the details of Khan's past statements and claims, said Charlotte Slaiman, competition policy director at the consumer group Public Knowledge and a former FTC antitrust official.

Pointing out gaps in antitrust law would probably not meet the threshold for recusal, Slaiman said, but clear statements alleging that Amazon has violated US antitrust law might. Where those could create problems, Slaiman said, would be in giving the appearance of having prejudged specific future cases against Amazon.

"Saying 'there are problems here that should be addressed' is different than saying Amazon has violated the antitrust laws," Slaiman said.

She added that if Khan were to recuse herself from any agency votes on Amazon-related cases, it could tip the balance of power on the commission.

The FTC is currently led by three Democrats and two Republicans; one Democratic commissioner, Rohit Chopra, has been nominated to lead the Consumer Financial Protection Bureau. His departure from the FTC would create a vacancy that, if not filled immediately, would leave the commission at a 2-2 partisan deadlock.

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Amazon wants FTC Chair Lina Khan recused from all its cases - CNN
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Rising gas prices are a risk for Biden - Yahoo Finance

Some inflation is good, since it indicates strong demand for products after the forced misery of a pandemic year stuck at home. But certain types of inflation should scare politicians.

The rising cost of gasoline is one of them. Gas prices have an outsized impact on consumer psyches, since drivers see the price in foot-high numbers everywhere they go and count the drain as their wallets shrink. The higher cost of getting around somehow cramps Americans’ sense of independence, souring them on whoever happens to be in charge.

Gas prices now average around $3.15 per gallon nationally, about a dollar more than they were a year ago. That’s not terrible. Gas prices were artificially depressed last year, since everybody stopped moving. And $3.15 is only about 20 cents higher than the average during the last 10 years.

Next year could be the problem, however. Bank of America recently predicted that oil prices could hit $100 per barrel in 2022, for a number of reasons, including pent-up demand for travel, people shying away from mass transit, and social and regulatory pressure to emit less carbon. “Demand is poised to bounce back and supply may not fully keep up,” BofA analysts conclude.

Photo by: STRF/STAR MAX/IPx 2021 6/20/21 Gas prices remain steady in New Jersey and around the nation over the past month, as gasoline supply grew and demand decreased. Here, an EXXON station is seen in South Orange, New Jersey.

Oil at $100 could equate to gas prices close to $4 per gallon. The last time oil hit $100, in 2014, gas prices peaked at $3.75. The record high for gas prices, $4.17, came when oil hit $145 in the summer of 2008. The price correlation between and oil and gasoline has changed a bit, and not in a way that favors consumers. Most states have raised gas taxes, and refiners face new rules that add cost. There’s also a shortage of drivers for the trucks that deliver gas to filling stations, another cost booster. “One-hundred-dollar oil today could get us close to the $4 per gallon mark,” says petroleum analyst Patrick De Haan of GasBuddy.

Blaming Biden for rise in gas prices

The $4 threshold is an unmistakable pain point for drivers—though many may not care too much this summer, when they’re happy to be free to hit the road. As with other things that have gotten more expensive, consumers who have been saving money and awaiting their Covid vaccines may pay without remorse, grateful for the freedom to leave home.

Consumers have short memories, however, and a sustained boost to gas prices would pose two threats to President Biden and his fellow Democrats. The first involves the 2022 midterm elections, when Democrats will have a tough time holding onto their narrow majorities in the House of Representatives and the Senate. Biden has solid approval ratings now, with Covid vaccines and a recovering economy boosting confidence. But 12 or 15 months from now, vaccine euphoria may be over.

Republicans are already blaming Biden for the rise in gas prices during the last few months. That’s a bogus charge. Gas prices are typically volatile and they move in response to global economic forces, not the political policies of any one politician. Still, as we’ve all learned, veracity matters less in politics than the ability to hurl a charge and make it stick. If Biden were to answer this claim by saying it's overblown, it might sound tone-deaf to voters concerned about higher driving costs.

Gas prices are displayed at a Chevron station on June 14, 2021 in Los Angeles, California. The average price for a gallon of gasoline continues to rise amid inflation fears with the current rate of regular grade up to $3.13 nationwide. In California, the average price is now over $4.00. (Photo by Mario Tama/Getty Images)

There’s another, longer-term risk to Biden’s agenda. Biden is pushing the most aggressive green-energy program of any president in U.S. history, with the goal of eliminating carbon from the power sector by 2035 and from the entire economy by 2050. The goal is technologically challenging and would require a rapid and possibly disruptive move away from fossil fuels toward newer technologies.

Fossil-fuel advocates hoping to slow-roll this transition argue that new forms of energy will raise costs for consumers. The evidence suggests otherwise, with the cost of renewables plunging during the last few years. Still, rising gasoline costs amid Biden’s green-energy push would be a correlation political foes would eagerly exploit to argue that Biden’s plan is costing consumers money. Even if false, it could weaken support for Biden’s climate plans.

It could turn out that gas prices aren’t a problem any time soon. The cure for high oil prices, famously, is high oil prices: As margins rise, producers bring more supply to market, which in turn lowers prices. The BofA study, in fact, sees prices coming back down in 2023. That would be a year too late for Biden, however.

Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.

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Didi Stock Price Rises 20% in IPO. What to Know. - Barron's

A Didi Chuxing autonomous taxi during a pilot test drive on the streets in Shanghai.

Hector Retamal/AFP/Getty Images

Didi Global, the Uber of China, delivered one of the year’s biggest IPOs, raising $4.4 billion. 

On Wednesday, shares of Didi (ticker: DIDI) opened at $16.65 and reached a high of $18.01. It recently changed hands at $16.83, up 20% from its offer price.

The Chinese ride-hailing behemoth on Wednesday said it sold 316.8 million American depositary shares at $14, the top of its $13 to $14 price range. Four such shares represent one class A ordinary share. The company announced on Wednesday morning that it had increased the size of the deal; it had planned on offering 288 million shares.

At $16.83 a share, Didi’s valuation climbs to $87.5 billion on a fully diluted basis.

Didi was one of 10 companies scheduled to open for trading Wednesday.

More on Didi and IPOs

SentinelOne (S), the AI-powered cybersecurity platform, also began trading Wednesday. The stock kicked off at $46 and hit a high of $46.50. It recently traded at $43.07, up 23% from the offer price.

On Tuesday, SentinelOne collected $1.2 billion after selling 35 million shares at $35 each, above its expected price range. SentinelOne had filed to offer 32 million shares at $26 to $29 each, which it boosted to $31 to $32 a share on Monday.

Goldman Sachs, Morgan Stanley, and J.P. Morgan are the underwriters on the Didi offering.

Didi provides a smartphone app that lets users connect with vehicles and taxis for hire. Founded in 2012, it operates in nearly 4,000 cities, counties, and towns across 16 countries, its prospectus said. It had more than 493 million annual active users as of March 31. 

At $4.4 billion, Didi is the year’s second biggest IPO. Coupang (CPNG), which collected about $4.6 billion in March, remains the year’s largest IPO, Dealogic said.

Write to luisa.beltran@barrons.com

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Didi Stock Price Rises 20% in IPO. What to Know. - Barron's
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Amazon Seeks Recusal of FTC Chairwoman Lina Khan in Antitrust Investigations of Company - The Wall Street Journal

Lina Khan, who was designated FTC chairwoman this month, has been a leading critic of dominant technology companies.

Photo: graeme jennings/pool/Shutterstock

WASHINGTON— Amazon.com Inc. filed a request with the Federal Trade Commission seeking the recusal of new Chairwoman Lina Khan from antitrust investigations of the company, in light of her extensive past criticisms of the online giant.

“Given her long track record of detailed pronouncements about Amazon, and her repeated proclamations that Amazon has violated the antitrust laws, a reasonable observer would conclude that she no longer can consider the company’s antitrust defenses with an open mind,” Amazon said in a 25-page motion filed Wednesday with the FTC.

An FTC spokeswoman declined to comment.

Ms. Khan has been a leading critic of dominant technology companies—especially Amazon—and a central figure in a progressive movement that favors sweeping changes to antitrust enforcement to take on the nation’s most powerful firms. The Senate confirmed her earlier this month for the FTC, and President Biden immediately installed her as the head of the agency.

Amazon’s recusal request comes at a pivotal time both for the company and the FTC.

The commission has an open, wide-ranging antitrust investigation into Amazon’s business practices, and it recently secured the right to review Amazon’s proposed acquisition of Hollywood studio MGM.

The five-member FTC currently has a 3-2 Democratic majority.

Commissioners have found bipartisan agreement on a range of matters but have split in some high-profile antitrust cases, and the commission’s two Republicans hold views that diverge from Ms. Khan’s.

Ms. Khan’s career took off after she wrote a widely read law-review article while a student at Yale Law School that argued that antitrust law has failed to restrain Amazon.

Before her nomination to the FTC, Ms. Khan worked as a key House staffer on a congressional antitrust panel that conducted a 16-month investigation of large online platforms and last year recommended that lawmakers take steps to rein them in.

During Ms. Khan’s confirmation proceedings, Sen. Mike Lee of Utah, a leading Republican on antitrust issues, asked her whether she would have to recuse herself from Big Tech cases because of her work on the House online-platform investigation.

Ms. Khan said she would consult with FTC ethics officials if recusal questions arose.

Write to Brent Kendall at brent.kendall@wsj.com

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Amazon Seeks Recusal of FTC Chairwoman Lina Khan in Antitrust Investigations of Company - The Wall Street Journal
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Robinhood ordered to pay $70m penalty to US regulator - Financial Times

A Wall Street regulator has ordered the retail trading platform Robinhood to pay more than $70m in penalties for causing what it described as “widespread and significant” harm to its customers.

The Financial Industry Regulatory Authority announced on Wednesday that it was fining Robinhood $57m, and ordering it to pay $12.6m plus interest in restitution to its customers, the largest penalty ever ordered by the regulator.

Among a litany of failures alleged by Finra, widespread technical problems on the platform during periods of high volatility cost some traders tens of thousands of dollars, it said.

Robinhood also allowed thousands of customers to trade risky derivative products when it was “not appropriate” for them, according to the regulator, and gave customers false or misleading information about how much cash was in their accounts, their ability to trade on margin, and the risk of losses on derivatives trades. 

Finra cited the death by suicide of a young Robinhood customer last year, who mistakenly believed he had incurred $730,165 in losses on a margin trade. In fact, his account had a balance of $16,000. In a note found after his death he indicated he did not believe that he had “turned on” margin trading on his account.

For more than five years, Robinhood had “failed to establish and maintain” a system for complying with securities regulations, Finra said.

“Compliance with these rules is not optional and cannot be sacrificed for the sake of innovation or a willingness to ‘break things’ and fix them later,” said Jessica Hopper, head of Finra’s enforcement department.

In response to Finra’s action, the company said: “Robinhood has invested heavily in improving platform stability, enhancing educational resources, and building out our customer support and legal and compliance teams. We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratising finance for all.”

The penalties come as Robinhood plans a stock market listing to capitalise on a period of explosive growth. The broker dealer has become synonymous with the rise of retail day trading since the start of the pandemic and the boom in “meme stock” trades. It has more than doubled the number of users on its platform in the past year, from 13m at the end of March 2020 to 31m currently, according to Finra.

The opening of dubious accounts was another issue flagged by Finra. In the period up to the end of 2018, Robinhood automatically opened many accounts despite warnings of potential identity fraud, including more than 100 accounts where there was a “high probability that the customer’s social security number belonged to a deceased person”.

Robinhood also failed to notify Finra of tens of thousands of customer complaints that it was required to report, the regulator said.

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Amazon seeks recusal of FTC chair Lina Khan in antitrust probes of the company - CNBC

Lina Khan, nominee for Commissioner of the Federal Trade Commission (FTC), speaks during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington, DC, April 21, 2021.

Saul Loeb | Pool | Reuters

Amazon is pressing for the recusal of FTC Chairwoman Lina Khan from ongoing antitrust probes of the e-commerce giant, citing her past criticisms of the company's power.

In a 25-page motion filed Wednesday with the FTC, Amazon argued that Khan has made public comments about Amazon and its conduct, including that the company is "guilty of antitrust violations and should be broken up," suggesting she lacks impartiality in antitrust investigations into Amazon.

Amazon spokesperson Jack Evans told CNBC in a statement that Khan has made her views clear through previous work with anti-monopoly group Open Markets Institute, law journal articles and her involvement in the House Judiciary subcommittee on antitrust's sweeping probe into big tech companies.

"Amazon should be scrutinized along with all large organizations. However, even large companies have the right to an impartial investigation," Evans said. "Chair Khan's body of work and public statements demonstrate that she has prejudged the outcome of matters the FTC may examine during her term and, under established law, preclude her from participating in such matters."

An FTC spokesperson declined to comment, saying petitions and letters to the FTC are not public.

The move comes as regulators in the U.S. and abroad are probing multiple areas of Amazon's business. Europe's top antitrust watchdog brought charges against Amazon last fall and launched another probe into its core retail business. Congress and the FTC are investigating Amazon's treatment of third-party sellers.

Additionally, the FTC is reviewing Amazon's proposed acquisition of movie studio MGM, The Wall Street Journal reported this month. On Wednesday, Democratic Senator Elizabeth Warren wrote a letter to the FTC urging it to carry out a "broad and meticulous review" of the MGM deal, arguing it could have anticompetitive effects in the streaming industry and potentially harm small businesses and workers.

Earlier this month, Khan was sworn in as chair of the FTC. The surprise move came just hours after she was confirmed by the Senate to serve as a commissioner.

During her confirmation hearing before the Senate, Khan told Sen. Mike Lee, R-Utah, she has no financial conflicts that would make her subject to recusal under ethics laws. She said she would follow the evidence where it leads.

Khan made her first big splash in antitrust circles with her 2017 Yale Law Journal article, "Amazon's Antitrust Paradox." The article, which she wrote while still a law student, argued that the popular antitrust framework focused on consumer welfare, was inadequate to assess digital giants like Amazon.

The consumer welfare standard often looks at whether prices go up or down for consumers, but Khan advocated for a more expansive view of antitrust enforcement that could take into account Amazon's role as a platform on which its own rivals rely. She said it was also necessary to understand why a high-growth platform might engage in predatory pricing.

It's not uncommon for companies or advocate groups to challenge commissioners' involvement in certain cases based on their perceived biases.

In the late 1970s, then-FTC Chairman Michael Pertschuk was ordered by a federal court to remove himself from a rulemaking inquiry into TV advertising aimed at kids because of his past criticism of such ad practices. But an appeals court later overturned that ruling.

Still, Pertschuk ultimately chose to withdraw from the matter because he said it was becoming a distraction from the inquiry itself.

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Amazon seeks recusal of FTC chair Lina Khan in antitrust probes of the company - CNBC
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It's going to get trickier for the stock market. Here's what to watch now, says HSBC strategist. - MarketWatch

Robinhood Agrees to Pay $70 Million to Settle Regulatory Investigation - The Wall Street Journal

The Financial Industry Regulatory Authority, the front-line inspector of broker-dealers, unveiled the settlement Wednesday.

Photo: andrew kelly/Reuters

WASHINGTON—Robinhood Financial LLC has agreed to pay nearly $70 million to resolve sweeping regulatory allegations that the brokerage misled customers, approved ineligible traders for risky strategies and didn’t supervise technology that failed and locked millions out of trading.

The enforcement action is a blow to the fast-growing online brokerage, which was launched in 2014 and has won over users with commission-free trades and its sleek mobile app. The company took on millions of new customers and attracted more scrutiny this year as many investors accessed Robinhood to speculate on so-called meme stocks such as GameStop Corp. and AMC Entertainment Holdings Inc. Its forthcoming initial public offering is one of the most anticipated of the year.

Robinhood’s growth has continued, with its biggest source of revenue, stemming from customer trading, more than tripling in the first quarter, even as many customers complained about its technology snafus and limited customer service. It enraged clients earlier this year when it restricted trading in some popular stocks that had become so volatile that Robinhood’s clearinghouse told the brokerage to post billions of dollars in additional collateral.

The Financial Industry Regulatory Authority, the front-line inspector of broker-dealers, unveiled the settlement Wednesday. Robinhood neither admitted nor denied the claims.

“We’re fine with innovation, but innovation can’t be at the cost of creating compliance and supervision systems,” Finra Enforcement Chief Jessica Hopper said in an interview. Finra, which is privately funded by the brokerage industry, is overseen by the Securities and Exchange Commission.

Robinhood now has 31 million customers.

Photo: Associated Press

Robinhood spokeswoman Jacqueline Ortiz Ramsay said that the company was pleased to resolve the investigation and would focus on its mission of making investing more accessible. “Robinhood has invested heavily in improving platform stability, enhancing our educational resources, and building out our customer support and legal and compliance teams,” she said.

Robinhood now has 31 million customers, 18 million of whom have funded accounts, according to a settlement document made public Wednesday.

Finra alleged a series of failings by Robinhood, which agreed to a $57 million fine and $12.6 million in compensation for harmed investors. Many allegations involved problems with technology that automated the opening of new accounts or trading strategies and updated clients about their balances or borrowed funds.

The company opened 90,000 new accounts from 2016 to 2018 despite red flags signaling possible identity theft or other fraud, Finra said. Robinhood qualified thousands of other accounts to trade options even though the clients didn’t meet eligibility criteria, according to Finra.

One example cited by Finra: A new customer, who was 20 years old, was rejected for options trading after noting that he had little investing experience and a low risk tolerance. Three minutes later, the customer changed his risk appetite to “medium” and said he had three years of investing experience. Within seconds, Robinhood approved him for options, according to Finra’s settlement document.

In another example that turned into tragedy, a 20-year-old Robinhood customer, identified as Customer A, took his own life in June 2020 after seeing an account notice that he had a negative balance of $720,000. The customer was rattled by the notice because he thought he had turned off his ability to borrow funds from the brokerage to trade, according to the settlement document.

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Robinhood also misinformed the customer about the value of his position; it was actually negative $365,530, or half what Robinhood’s system showed, the settlement states.

The description of Customer A matches that of Alex Kearns, whose family sued Robinhood in 2021 in California state court, asserting claims for wrongful death, negligent infliction of emotional distress and unfair business practices.

Attorneys for the Kearns family notified the court in May that it reached a settlement with Robinhood for an undisclosed amount.

Earlier

Executives of Robinhood and other companies testified before Congress Thursday after January’s trading frenzy involving GameStop and other securities raised concerns about the integrity of the U.S. stock market and the rules that govern it. Photo illustration: Ang Li (Video from 2/18/21) The Wall Street Journal Interactive Edition

“We were devastated by Alex Kearns’ death,” a Robinhood spokesman said in an email at the time. “We remain committed to making Robinhood a place to learn and invest responsibly."

Robinhood misled other traders who similarly believed they couldn’t use borrowed money, or margin, if they turned off that feature, Finra said. Clients who disabled margin could still wind up using borrowed money if they made certain types of options trades, the regulator said.

Finra’s investigation also faulted Robinhood for technology outages that disrupted its service in early March 2020 and prevented 12.5 million account holders from trading. Users of its app couldn’t communicate with Robinhood about the outages because the company’s customer-service channels also experienced disruptions, Finra said.

Later that month, Robinhood experienced another outage that stemmed from an untested update to how it communicated with a trading venue that executed client orders. Robinhood didn’t adequately supervise such systems, even though senior executives were aware that disruptions threatened the company’s reputation and growth, according to the regulator.

The $57 million fine is the biggest ever levied by Finra, which employs about 3,700 people and handles inspections of most broker-dealers for the SEC. Finra, then known as the National Association of Securities Dealers, fined Credit Suisse First Boston Corp. $50 million in 2002 over allegedly inflated commissions for hot initial public offerings.

The investment bank, now known as Credit Suisse, settled the matter without admitting or denying the allegations. John Mack, the head of CSFB at the time, said the bank was pleased to resolve the investigation.

The self-regulatory organization has sometimes been criticized for assessing fines that lack teeth. In recent months, it has stressed that it would dig into the ways that more tech-savvy retail investors trade, including brokerage platforms that use enticing graphics and other behavioral cues to reward and encourage trading.

The terms of the settlement also call for Robinhood to hire a consultant to review the brokerage company’s compliance systems within six months. Robinhood would then have another three months to implement any recommendations made by the consultant.

Also on Wednesday, Finra said it would launch a $30 million campaign to educate new investors who use apps like Robinhood’s to trade a variety of risky assets. Finra said it would seek public and industry comment about how to carry out the effort.

Robinhood still faces scrutiny from the SEC and New York state regulators related to options trading, according to a regulatory disclosure filed by Robinhood in February. The SEC’s examinations division, which is separate from its enforcement staff, is looking into its practices related to options, the disclosure said.

The settlement follows two earlier enforcement investigations that Robinhood settled with Finra and the SEC.

In 2019, the broker paid $1.5 million to resolve Finra’s claims that it didn’t take adequate steps to ensure it got the best prices for customer orders. In December, Robinhood agreed to pay $65 million to the SEC to settle claims related to its disclosures of payment for order flow, or accepting revenue from high-speed trading companies that pay for the right to execute retail investors’ orders.

Robinhood said after reaching the SEC settlement that the problems found through that investigation “do not reflect Robinhood today.”

U.S. securities laws allow payment for order flow, as long as the brokerage company’s relationships and any conflicts of interest are disclosed accurately.

—Peter Rudegeair contributed to this article.

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United's new Boeing jets will offer Bluetooth audio with its in-flight entertainment - Engadget

United has announced that it’s adding 270 Boeing and Airbus planes to its fleet in a bid to reinvigorate domestic travel now that states have started lifting pandemic-related restrictions. And one of the best news for frequent flyers is that the new jets will feature seatback entertainment screens that come with Bluetooth connection. In addition, United will refurbish its old mainline jets with the new and upgraded in-flight entertainment until 2025.

Bluetooth audio is a much-requested addition to all in-flight entertainment systems that United has granted with the launch of its new interior. As The Verge notes, tech companies have been pushing a wireless lifestyle onto consumers by removing headphone jacks from their phones and launching truly wireless earbuds. Some may have already thrown their wired earphones away, or tucked them away in a drawer, forgotten until the next time they decide to do some spring cleaning.

Aviation writer Jason Rabinowitz has tweeted a video that gives us a look at the new seatback entertainment system with Bluetooth capabilities on a 737 MAX 8 plane. As you can see, all of the seats will have entertainment screens, which while great for passengers could also cause a bit of a headache. At full capacity, passengers may have trouble pairing their earphones as everyone tries to connect to Bluetooth at the same time.

Still, that’s a small problem for those waiting for the feature for a long time. Bluetooth audio is a fantastic addition to the new planes’ entertainment systems, and passengers will be able to get to try it soon. United will fly its first 737 MAX 8 jets with the new interior this summer, while its first 737 MAX 10 and Airbus jets will start flying in 2023.

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United's new Boeing jets will offer Bluetooth audio with its in-flight entertainment - Engadget
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Didi gears up for blockbuster US IPO in quest to go 'truly global' - CNN

Stock in China's biggest ride-hailer is set to start trading Wednesday in New York, the company announced. Didi priced its shares at $14 apiece, raising $4.4 billion and making it the largest Chinese IPO in the United States since Alibaba's $25 billion offering in 2014, according to Dealogic.

The deal values the company at more than $67 billion.

Political and regulatory headaches

Didi, which forced Uber out of mainland China five years ago, is listing on Wall Street at a delicate time. The company has attracted scrutiny from regulators in China, where the tech sector is undergoing a historic crackdown.

In April, the ride-hailer was one of 34 companies summoned for a meeting with the State Administration for Market Regulation (SAMR), where executives were told to put an end to any anti-competitive behavior and ordered to carry out internal inspections.

This month, Reuters reported that Didi was being investigated for antitrust concerns. According to the report, which cited anonymous sources, Didi was being probed by SAMR about whether it had "used any competitive practices that squeezed out smaller rivals unfairly."

Didi said in a statement at the time that it would "not comment on unsubstantiated speculation from unnamed sources." SAMR did not respond to a request for comment from CNN Business.

The company is also making a splash in New York amid significant US-China tensions.

While many major Chinese tech firms trade in the United States, including Alibaba (BABA) and JD.com (JD), the environment has gotten more volatile in recent years. Lately, a flurry of Chinese companies listed on Wall Street have held secondary offerings in Hong Kong so they can establish stronger roots closer to home, with some citing worsening regulatory hurdles in the United States. Some, like China Mobile and China Telecom, have been kicked off US exchanges altogether.

Despite the tensions, 2020 still saw some $12 billion raised by Chinese companies from US listings, according to data provider Refinitiv. Almost $8 billion has been raised by Chinese firms so far in 2021, more than triple the amount reached at the same point last year.

Didi is emblematic of both trends. Its upcoming debut will mark one of the top 10 US listings over the past decade, as well as the fourth-largest US IPO by a Chinese company on record, according to Dealogic.

But in recent months, the company has also considered a dual listing in Hong Kong, according to a person familiar with the matter.

A Chinese champion

Didi is ubiquitous in China, boasting 377 million annual active users in the country alone.

The company was founded in Beijing in 2012 by former Alibaba manager Cheng Wei, who created a cab service provider known as "Didi Dache," which means taxi-hailing in Mandarin.

Didi rapidly won the backing of heavyweights including Apple (AAPL), SoftBank (SFTBF) and Alibaba (BABA), while also fending off rivals. In 2015, it acquired its top local competitor, Kuaidi Dache, effectively knocking an opposing horse out of the race. The new combined company rebranded its flagship app to Didi Chuxing shortly afterward.

In 2016, Didi also bought Uber's China business, ending the US firm's presence there. Former Uber CEO Travis Kalanick acknowledged Didi as "a fierce competitor," and agreed to have the companies exchange stakes. (Didi exited its position in Uber (UBER) late last year. Uber retains a stake of about 12% in Didi.)

Since then, Didi has ballooned to offer a whole suite of services, including ride-hailing, bike-sharing, taxi and carpooling services.

The firm now bills itself as the world's largest mobility platform, with users in China and 15 other countries, including Brazil, Mexico and Russia.

But it remains extremely reliant on its home market: More than 93% of its sales come from China.

The company is looking to change that. In a Securities and Exchange Commission filing, Didi said it planned to use a third of the money it is raising to expand its footprint outside China.

"We aspire to become a truly global technology company," Will Wei Cheng and Jean Qing Liu, who serve as CEO and president, respectively, wrote in a letter to investors.

Another third of the funding will be used to develop its technology in areas such as electric vehicles and autonomous driving. The rest will go toward coming up with new products or services, or other strategic investments. In their letter, Cheng and Liu said that the company was exploring new launches in areas such as "intra-city freight, community group buying and food delivery."

Like many startups, Didi has struggled to turn a profit for years, despite pulling in billions of dollars in revenue.

It finally managed to turn that around this year, eking out roughly $800 million in net income for the quarter ended March.

"Didi is a terrific, founder-led, industry-leading innovator," Jim Breyer, founder and CEO of Breyer Capital, an investor, told CNN Business in an email. "I have been privileged to observe their leadership since I first invested several years ago and look forward to their next chapter of growth."

The company plans to list on the New York Stock Exchange under ticker symbol "DIDI."

— CNN's Beijing bureau, Julia Horowitz, Pamela Boykoff, Jill Disis and Diksha Madhok contributed to this report.

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U.S. Stocks Open Mixed - The Wall Street Journal

U.S. stocks traded in a narrow range Wednesday morning, suggesting that the major indexes are likely to close near record highs for the end of the quarter following a June rally powered by technology stocks.

The S&P 500 rose less than 0.1%, led by energy and industrial services after the broad-market index closed Tuesday at its 33rd all-time high of 2021. The gauge has climbed 2.1% so far in June in its fifth consecutive month of gains. The Dow Jones Industrial Average wobbled between gains and losses, recently adding 54 points, or about 0.2%. The blue-chips index is on pace to end June lower, marking its weakest month since January.

The Nasdaq composite declined 0.2%, about 23 points, pointing to tepid moves in technology stocks a day after the index notched a record high. The benchmark for technology stocks has climbed 5.5% so far in June.

Recently, investors have been rotating back into the technology stocks that they favored during Covid-19 lockdowns after inflation fears eased and low bond yields spurred a hunt for better returns. Optimism about the economic recovery, the prospect of more fiscal stimulus and confidence that the Federal Reserve will continue to support credit markets has also boosted sentiment in recent days.

“Growth sectors have been performing better as bond yields have stabilized,” said Shaniel Ramjee, a multiasset fund manager at Pictet Asset Management. “Given that it is the larger-cap part of the market, we’ll see overall indexes trending higher.”

The nonfarm private sector in the U.S. added 692,000 jobs in June, a drop from the previous month, but still above economists’ estimates, according to the latest ADP National Employment Report. Investors are closely scrutinizing any new information on the strength of the labor market, which the Fed has indicated is a priority.

In bond markets, the yield on the benchmark 10-year Treasury note edged down to 1.456% from 1.479% on Tuesday. As of Tuesday, the yield had dropped 0.113 percentage points this month. Bond yields fall when prices rise.

Brent crude, the international benchmark for oil prices, rose 0.5% to about $74.66 a barrel ahead of a meeting this week of major oil producers to discuss a potential increase in supply. The gauge is on course to post its biggest first-half gain since 2009, having risen nearly 44.2% so far in 2021.

Overseas, the pan-continental Stoxx Europe 600 slid 0.5% The index’s travel and leisure subsector is down 5.5% for the week so far, reflecting concern about the rise of Covid-19’s Delta variant in European countries such as the U.K. and Portugal.

“When you have initial spikes, especially in Europe, we are seeing the market take notice,” Mr. Ramjee said. “This doesn’t mean that we are expecting lockdowns, but could we expect a little bit of nervousness? Yes, that is possible.”

Stock benchmarks in southern European countries that are reliant on tourism were among the worst performers in the region, with Spain’s IBEX index dropping 0.8% and Portugal’s PSI index falling 1.2%.

In Asia, major benchmarks ended the final day of trading in June on a mixed note. The Shanghai Composite Index advanced 0.5% Wednesday, while Hong Kong’s Hang Seng Index slipped 0.6% by the close of trading.

The Nasdaq Composite and S&P 500 ended Tuesday at records.

Photo: Richard Drew/Associated Press

—Hardika Singh contributed to this article.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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Private payrolls rise 692,000 in June, easily topping expectations - CNBC

Private payrolls growth increased at a faster rate than expected in June thanks to a burst in hiring for the hospitality sector, ADP reported Wednesday.

The gain of 692,000 was well above the 550,000 Dow Jones estimate though it fell short of May's 886,000. In one bit of bad news for the jobs market, the May count was revised down sharply from the initially reported 978,000, though that still left it as the best month since September 2020.

From an industry standpoint, the biggest hiring gain came from the 332,000 pickup in leisure and hospitality. The sector, which includes bars, restaurants, hotels and other related businesses, took the hardest hit from the Covid-19 pandemic but has shown strong gains during the economic reopening.

Education and health services also indicated strong gains, increasing by 123,000, while trade, transportation and utilities rose by 62,000 and professional and business services saw 53,000 hires.

On the goods-producing side, construction payrolls increased by 47,000 while manufacturing was up 19,000.

Overall, services provided the bulk of the job gains with 624,000, while goods producers added 68,000.

ADP's chief economist, Nela Richardson, called the job gains "robust" with about 3 million hires this year, though that still leaves about 7 million who were working before the pandemic hit without jobs.

"Service providers, the hardest hit sector, continue to do the heavy lifting, with leisure and hospitality posting the strongest gain as businesses begin to reopen to full capacity across the country," Richardson said.

Job gains again were evenly spread across industries by size. Companies with more than 500 workers added 240,000, while firms with 50-499 workers contributed 236,000 and small firms increased by 215,000, according to ADP, which compiles the report with Moody's Analytics.

The ADP report serves as a walk-up to the more closely watched nonfarm payrolls count that the Labor Department will release Friday.

Economist surveyed by Dow Jones expect a total payroll increase of 706,000, compared with May's 559,000. The unemployment rate is projected to drop to 5.6% from 5.8%. However, the ADP and Labor Department counts often vary widely.

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Husband-Wife Team Build $2.4 Billion Fortune on Bubble Tea IPO - Bloomberg

Back in 2014, Peng Xin and her husband Zhao Lin pledged their home as collateral for a bank loan to get their fledgling bubble tea business off the ground.

Today, the company they founded, Nayuki Holdings Ltd., is valued at $3.8 billion, even after the stock slumped on Wednesday on its debut in Hong Kong. The couple’s stakes are each worth about $1.1 billion, according to the Bloomberg Billionaires Index.

“It wasn’t a reckless decision,” Peng, an executive director and the company’s general manager, said in an interview. “We spent almost two years testing our drinks on the street before opening our first store.”

Nayuki, which started with three branches in the southern Chinese city of Shenzhen, is riding a boom in the market for high-end tea drinks that’s seen it expand to more than 560 stores in more than 70 cities, mostly in China. But some analysts voiced concern about whether the still loss-making firm will be able to turn and stay profitable.

The company’s shares closed at HK$17.12, about 14% lower than the initial public offering price of HK$19.80.

Where Luckin Coffee Failed, Can Bubble Tea Succeed?: Shuli Ren

Bubble tea was created in Taiwan in the 1980s and later became popular elsewhere in Asia. While it’s frequently associated with tapioca balls that represent the “bubbles” in the name, Nayuki’s version often contains different items such as fresh fruits or cream cheese toppings.

Nayuki, which raised about $656 million in its IPO, accounted for around 19% of the premium modern tea cafe market by total retail consumption in 2020, the company said in its IPO prospectus, citing a China Insights Industry Consultancy report. That’s the second-largest share, it said. Another major player is HeyTea, which was established in 2012 and is closely held.

WATCH: Nayuki General Manager Peng Xin discusses the Chinese bubble tea chain’s expansion plan and business strategy.

(Source: Bloomberg)

Peng, 33, met and married Zhao in Shenzhen, the city that serves as the country’s technology hub. She worked as a deputy secretary general of a software company before starting the firm.

Zhao, 42, Nayuki’s chairman, previously worked at several food companies including Burger King’s Shenzhen unit. Each of the two co-founders owns about 28% of Nayuki. The company declined to comment on their net worth.

“Our family and friends were worried about us at the time,” Peng recalled, referring to how they pledged their home as collateral. “But we and our team believed in our choice.”

A Nayuki store in Shanghai. The company has more than 560 stores in over 70 cities.

Photographer: Qilai Shen/Bloomberg

More than 90% of Nayuki’s outlets in mainland China are in Tier 1 and Tier 2 cities, the label that China gives to developed urban areas. It also has one store in Hong Kong and one in Japan.

The company aims to open 300 more branches this year and a further 350 in 2022, Peng said. Most of them will be a new store format called Nayuki PRO, which also sells coffee and smaller-sized bakery items to lure office workers.

Nayuki has been launching a new drink every week since last year to keep younger customers coming back to its stores, Peng said.

She said the company gets most of its sales online after the coronavirus changed consumption habits.

“After the pandemic, we see 70% of our orders from online platforms,” she said. “Customers used to come to our stores in groups of three or four to hang out and share food, but now we find more of them just order a drink online whenever they feel like it.”

The company posted revenue of about 3.1 billion yuan ($480 million) last year, and a net loss of about 203 million yuan.

Bubble Tea Chain Raises $656 Million in Hong Kong IPO

China’s tea cafe market will continue to enjoy “decent growth potential,” but whether Nayuki and other firms in the industry will achieve sustainable profitability is a concern, according to Jason Yu, managing director of research firm Kantar Worldpanel Greater China.

“Modernizing the entire supply chain to drive more efficiency remains the key challenge for Nayuki and its peers,” Yu said.

Nayuki has been launching a new drink every week since last year to keep younger customers coming back.

Photographer: Qilai Shen/Bloomberg

Nayuki may achieve a boost from its expansion, but the bigger question is whether it will be able to keep that going over the longer term, said Kenny Ng, a securities strategist at Everbright Sun Hung Kai Co. in Hong Kong.

“I think Nayuki still has much room to improve its profitability by scaling up the store network in the next three to five years,” he said. “But the real challenges for sustainable growth will come after that.”

Peng said the company is working to cut costs and boost efficiency, such as by automating labor-intensive processes including cutting fruits and kneading dough.

“We hope Nayuki can be a brand that customers are willing to come back to every day,” she said. “We want it to become something we can do for our whole life.”

— With assistance by Venus Feng, Daniela Wei, Jinshan Hong, and Pei Yi Mak

(Updates valuations in second paragraph, stock move in fifth paragraph)

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Facebook antitrust lawsuit dismissed, becomes $1 trillion company - Yahoo Finance

Myles Udland and Brian Sozzi discuss the ramifications of the dismissal of the U.S. government's antitrust lawsuit against Facebook after a federal judge ruled insufficient allegations that support the claim of Facebook being a monopoly.

Video Transcript

MYLES UDLAND: But we begin this morning with the latest on that news from Facebook. A district court judge in Washington dismissed a lawsuit filed against Facebook by the FTC and most states' attorney's general that alleged the company engaged in monopolistic practices by buying up rivals. Of course, notably, the acquisition of Instagram and then WhatsApp.

This news crossed later yesterday afternoon. It sent shares to a record high. Put Facebook's market cap north of a trillion dollars. Made Mark Zuckerberg worth more than $130 billion, exceeding the fortunes of Warren Buffett, among pretty much everybody else on planet Earth, save for five or six people.

But if we-- going to take a look at this news, Sozzi. We see here, you know, congrats to all these guys. And we think about the news for Facebook, and really the way the market received this news.

I think a lot of investors, unless you are following Facebook closely, were not really thinking too much about the legal proceedings against Facebook as there are legal proceedings against Facebook and Amazon, or rumblings of them, almost nonstop, it seems, at this point. But essentially the big win for Facebook here, and also the risk for Facebook, but we'll start with the real win for Facebook, is that the way the lawsuit was crafted and the argument that Facebook's acquisition of its two rivals was uncompetitive within Facebook's market, the market of operating social media companies, was just deemed not a sufficient definition by the judge.

And so, I think the real challenge here for lawmakers, and we've talked about this for the last several years as it's gotten more prominent in the air, is how are you going to-- by what statute are you going to penalize Facebook and Amazon simply for being very big companies? The fact that they are big companies does not necessarily mean they are anti-competitive or monopolistic companies. It may feel that way, but legally, arguing that in court, you can't just say, well, it feels that way to me. That's not a real legal argument. And of course, that's not really what the FTC argued, but the judge essentially said, you need to narrow how exactly you want to penalize Facebook here.

BRIAN SOZZI: Myles, maybe you and I will someday be on that billionaires list. Maybe a year from now. Who the heck knows.

But you know, I think the market read is this, and it is actually pretty simple to decode. Facebook shares are the top trending ticker on the Yahoo Finance platform right now. They have been pretty much ever since this decision hit the wires.

Read number one is that Facebook is not going to have to pay out another fine, at least for now, to the FTC as similar to what it did to the Cambridge Analytica debacle in the summer of 2019. That fine was $5 billion. So, the market's read here is, billions of dollars get to stay on the Facebook balance sheet, which brings me to point number two, Myles, and I'm curious to get your thought on this too.

So, Facebook is not now, or for right now, not going to have to be broken up. It can continue to make money off of WhatsApp, Instagram, and of course, its own namesake platform. Now that it can keep those billions on the balance sheet and the government is not going to attack it, who is to say that Facebook can't go out and buy another company? Will it do so overnight? Not saying that, but at least I think the door is a lot more open to Facebook going out and maybe acquiring something else now. That door is more open today than it was at the start of this week.

MYLES UDLAND: Yeah, they certainly could do that. Now, to that point, though, Sozzi, in the ruling issued by the judge yesterday, it outlined that the states themselves likely don't have grounds to challenge Facebook's old acquisitions, but that the FTC, the federal government, could indeed challenge both the acquisition of Instagram and WhatsApp. And so, I still think there is an opportunity. Not, I still think.

There clearly legally is still a route for the government to challenge past acquisitions for Facebook. And so, it's not as if there has been an indefinite stamp, well, there's been an indefinite, but not a forever binding stamp of approval on those acquisitions, given yesterday's ruling.

And so, I think, to your question, I'm not sure if Facebook right now has a lot of appetite for going to add a big company. And look, the solution here for Facebook were it-- were it to deem this the-- or were it to deem any kind of proceeding as an inevitable forced breakup, maybe they would preemptively look to spin-off one of these units, and obviously, get to keep a majority stake, and reap the benefits, so on and so forth. I don't really think any of that is imminent at this point. And I think the market's judgment on the ruling, or on the decision in the statement yesterday, the market's judgment is that Facebook gets to, for some period of time, several years at the very least, operate within its current structure.

And so, there is a little bit of a premium added to today's structure for the Facebook group at large, in terms of how much earnings power they are going to have as a collective. And so, I'm not sure-- I'm not sure the strategy move here, Sozz, is to go buy another company. I don't think Facebook calls Evan Spiegel and says, hey, how about now? That's never going to happen, really, but--

BRIAN SOZZI: Not going to happen today.

[LAUGHTER]

MYLES UDLAND: I don't see that happening. But certainly, I think there's-- there's going to be additional challenges, it would seem clear, to Facebook and others. But really the question with this, with Facebook and with Amazon, is about redefining, or more tightly defining, how we want to hold big companies accountable, because the consumer benefits standard really doesn't do anything but affirm and entrench Facebook and Amazon's power. They've been an incredible benefit to consumers, and of course, to businesses as well.

But if the standard is have you penalized consumers, very difficult, I think, to build a case on either of those grounds, at the current moment, with the current laws in play, you know, again, to penalize those companies. So, a very long road ahead, I think, for these businesses, the legal challenge. It's an interesting period of their business life certainly ahead, but the market deeming yesterday's ruling as at least an incremental medium term positive for Facebook. And again, pushing that company's value north of $1 trillion. And it joins Microsoft, Apple, and Amazon, so does Alphabet, in that category.

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