May 13, 2022 - Economy

What does Sam Bankman-Fried want with Robinhood?

Photo illustration: Gabriella Turrisi/Axios. Photo: Lam Yik/Bloomberg via Getty Images

FTX CEO Sam Bankman-Fried's purchase of a 7.6% stake in Robinhood has sparked a wave of speculation as to what plans "SBF" has for the stock trading company. Axios spoke with him to get a better sense of what he's up to.

Why it matters: The tussle haired billionaire filed a Schedule 13-D form with the SEC to disclose the $648.3 billion purchase. Filing a "D" means he is technically not a passive investor (that's a 13-G) and instead can take an activist position to transform the company by pushing various changes, if he chooses.

The intrigue: Robinhood has a dual-class share structure that gives CEO Vlad Tenev and co-founder Baiju Bhatt about 63% of the voting power in the company — meaning Bankman-Fried won't be able to take over the business or call for major changes without their green light.

  • Bankman-Fried's stake gives him 2.8% of the voting power, a Robinhood spokeswoman confirmed.

Yes, but: That doesn't mean Bankman-Fried won't try to change how things are done at the stock-trading company.

  • "This was something that I saw as an attractive investment, and there are a lot of areas for the company to grow and innovate going forward," Bankman-Fried tells Axios.

Driving the news: The $648 million worth of shares bought by Emergent Fidelity Technologies, an entity that names Bankman-Fried as its sole director, drove up the price of Robinhood’s shares by 23%.

  • The filing states that Bankman-Fried views it as an investment and has no current plans to acquire Robinhood.
  • However, the filing doesn't rule out more aggressive actions in the future. 13D forms are typically filed by activist investors who aim to push for major changes, like the sale of the company, or the divestiture of an asset.
  • "We're always open to any conversations," Bankman-Fried says, when asked whether he'd be interested in buying Robinhood in the future.

Of note: The stake does fit into the FTX CEO's broader vision of taking over all of finance rather than staying in his corner of crypto. Outside of the U.S., FTX offers tokenized securities, and it has taken steps toward offering securities trading in the U.S., too.

Fun fact: There was some speculation in our newsroom over whether the name of the company, Emergent Fidelity Technology, was a cheeky reference to investment giant Fidelity.

  • Bankman-Fried tells Axios that the the name was randomly generated.

This article was first published in Axios Pro Fintech, a daily newsletter on all things dealmaking in the world of financial technology.

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