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3D-printed Robinhood logo is seen in this illustration taken, July 1, 2021. REUTERS/Dado Ruvic

  • Online broker was at center of GameStop trading frenzy
  • Robinhood has turned to Cravath for litigation work before
  • It also bulked up its in-house team with ex-SEC lawyers
  • CLO's total comp hit $30 million in 2020

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(Reuters) - Wall Street law firm Cravath, Swaine & Moore is advising Robinhood, the online broker that emerged as a gateway for amateur traders to challenge hedge funds, on its initial public offering.

Robinhood disclosed Thursday in a pre-IPO filing with the U.S. Securities and Exchange Commission that its legal advisers from Cravath include the firm's corporate governance and board advisory practice chair John White; capital markets practice head for North America Andrew Pitts; and Scott Bennett, who previously advised the broker on a $3.4 billion capital raise.

It also listed its chief legal officer Dan Gallagher and in-house lawyers Christina Lai and Weilyn Wood as counsel. Gallagher's compensation totaled more than $30 million in 2020, Robinhood disclosed in its filing.

Representatives for Cravath and Robinhood did not immediately respond to requests for comment. Nor did a representative for Davis Polk & Wardwell, which is advising underwriters on the IPO including Goldman Sachs, Citigroup and JPMorgan.

The Davis Polk partners on the matter include Byron Rooney, who is based in New York and who advised on dating app Bumble's IPO, and Emily Roberts, who is based in Northern California and who advised on Uber's IPO.

Robinhood, credited with democratizing trading, has faced a slew of legal troubles in recent years.

It tapped Cravath partners Kevin Orsini and Antony Ryan in February to represent it in lawsuits in California federal court over its restrictions on trading in shares of GameStop and other companies whose stocks saw hefty gains in a Reddit-fueled trading frenzy.

On Wednesday, the Financial Industry Regulatory Authority (FINRA) fined Robinhood $70 million for "systemic" failures, including systems outages, providing "false or misleading" information, and weak options trading controls that the regulator said harmed millions of the app's customers.

FINRA also fined Robinhood $1.25 million in 2019 for order execution failures. The SEC fined Robinhood $65 million last year to settle charges it misled customers about its revenue sources.

Debevoise & Plimpton partner Andrew Ceresney, the former SEC enforcement chief, has been Robinhood's go-to lawyer for regulatory enforcement and litigation matters.

The company also built up its in-house legal team since 2020.

It brought on former SEC commissioner Gallagher as CLO in May 2020, when its top lawyer stepped down to attend to a family illness.

Gallagher, who had been at Wilmer Cutler Pickering Hale and Dorr, soon brought over another partner from the firm, Lucas Moskowitz, who previously held SEC roles including chief of staff under Chairman Jay Clayton. Lai, a former Applied Materials and Yahoo lawyer, joined the broker as a deputy general counsel last August.

Read More:

Facing fresh legal crisis, Robinhood has lawyers to spare

Robinhood taps Cravath's Orsini and Ryan for GameStop litigation

Online brokerage Robinhood reveals revenue surge in IPO filing

Robinhood fined $70 mln for harming 'millions' via misleading info, outages

Caroline Spiezio covers legal industry news, with a focus on law firms and in-house counsel. She is based in New York. Reach her at Caroline.Spiezio@thomsonreuters.com.

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