Robinhood plans to buy back shares from Sam Bankman-Fried entity
- Lucinda Shen, author of Axios Pro: Fintech Deals
Photo illustration: Gabriella Turrisi/Axios. Photo: Lam Yik/Bloomberg via Getty Images
Robinhood announced Wednesday it plans to buy back shares from Sam Bankman-Fried's Emergent Fidelity Technologies, the stock trading company announced Wednesday.
Why it matters: That particular Robinhood stake is currently in legal hell after FTX's implosion.
Driving the news: Robinhood's board has authorized the purchase of "most or all" of the 55 million shares Emergent Fidelity Technologies acquired last year, it said in its earnings report Wednesday.
Background: Emergent Fidelity Technologies was formed to buy a 7.6% in Robinhood in early 2022. Now however, the stake is being disputed by several players.
- Creditors, including BlockFi and Bankman-Fried, all claim to be owed the Robinhood shares, while the stake itself is currently in the hands of the U.S. government.
- Bankman-Fried owns about 90% of the entity, while his FTX co-founder Gary Wang owns about 10%.
Of note: The stake in Robinhood was bought by Bankman-Fried when shares were trading around $11.50 a share. Shares were trading around $10.80 in aftermarket trading Wednesday.
Between the lines: There's a chance the repurchase may not happen, given the legal morass.
- "Since there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place," the press release read.
The bottom line: Robinhood will be going through a lot more trouble to buy back the stake than Bankman-Fried did to acquire it.