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Robinhood IPO Filing Shows CLO’s Pay Valued at $30 Million (1)

July 1, 2021, 7:12 PMUpdated: July 1, 2021, 10:27 PM

Robinhood Markets Inc. gave its chief legal officer Daniel Gallagher Jr. a pay package valued at nearly $30.1 million last year, according to a securities filing Thursday by the financial technology company.

The S-1 filing by Robinhood disclosing its plans to go public at a placeholder valuation of $100 million came a day after the online trading platform agreed to pay a record $70 million fine as part of a settlement with the Financial Industry Regulatory Authority, the self-regulatory body for the brokerage industry.

Robinhood’s proposed initial public offering, which has been expected for months and is considered one of the more high-profile stock floats of this year, reveals that the bulk of Gallagher’s total compensation is comprised of more than $24.6 million in stock awards. Gallagher also received roughly $990,900 in options awards, about $257,400 in base salary, and a $4.2 million bonus, per Robinhood’s S-1.

The filing states Robinhood entered into an amended and restated offer letter with Gallagher on Dec. 15, 2020—days before the company finalized a $65 million settlement with the Securities and Exchange Commission over its disclosure practices—that paid him a $2.1 million retention bonus that month. He had already received another $2.1 million bonus upon joining Robinhood earlier in the year, according to his offer letter, which notes his full-year base salary is $400,000.

Gallagher’s restricted stock awards vest in quarterly installments. He is the latest law department leader at a fast-growing financial services company to potentially reap the benefits of going public. Cryptocurrency exchange Coinbase Global Inc. revealed ahead of its stock market debut in April that Paul Grewal—whom it hired last year as its top in-house lawyer—had a 2020 pay package valued at over $18 million.

Robinhood hired Gallagher to be its top lawyer in May 2020, replacing Anne Hoge, who left the Menlo Park, Calif.-based company for family reasons. Robinhood initially recruited Gallagher to serve on its board in late 2019. At the time he was deputy chair of the securities group at Wilmer Cutler Pickering Hale and Dorr in Washington.

Gallagher returned to the law firm earlier that year after spending two years as legal chief for former Dutch pharmaceutical giant Mylan NV. Bloomberg data reveals that Gallagher owns nearly $573,000 in stock for Viatris Inc., a Canonsburg, Pa.-based health care company that’s the successor to Mylan.

Prior to that he was president of Patomak Global Partners LLC, a financial services consulting firm, and served as an SEC commissioner between 2011 and 2015.

Growing Legal Group

Robinhood’s S-1 shows that Cravath, Swaine & Moore has been advising the company as it prepares to go public, while Davis Polk & Wardwell is representing underwriters led by Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley. Legal fees related to Robinhood’s IPO are not yet available.

John White, chair of Cravath’s corporate governance and board advisory practice, is counseling Robinhood on its IPO, along with the firm’s North America head of capital markets Andrew Pitts, corporate partner D. Scott Bennett, and associate Claudia Ricciardi. The latter three lawyers were part of a Cravath team that advised Robinhood earlier this year in raising $3.4 billion in capital.

Cravath has handled nearly 12% of Robinhood’s federal litigation caseload within the past five years, according to Bloomberg Law data. The firm is currently representing Robinhood in lawsuits filed against the company earlier this year by retail traders and other investors upset about its decision to curb trading in soaring stocks for companies like GameStop Corp. and AMC Entertainment Holdings Inc.

During the first quarter of this year, Robinhood collectively paid $225,000 to five separate law and government relations firms for federal lobbying on matters related to securities law and litigation, stock market volatility, and the regulation of broker-dealers, securities trading, and capital markets, according to U.S. Senate records.

Robinhood, founded in 2013, has also assembled its own in-house lobbying team that includes deputy general counsel for regulatory, litigation and government affairs Lucas Moskowitz and associate general counsel for federal affairs Bethany Zorc. Moskowitz, a former SEC chief of staff who joined Robinhood last summer, is also one of several former WilmerHale lawyers hired by Gallagher. Zorc, a former head of public policy at Wells Fargo & Co., came aboard in November.

Gallagher, deputy general counsel and corporate secretary Christina Lai, and associate general counsel Weilyn Wood, are listed on the S-1 filed Thursday by Robinhood. Lai was hired by the company last summer, while Wood joined Robinhood in January. That same month the company recruited Anthony Cavallaro—a veteran FINRA executive—to be its head of regulatory services and fraud oversight.

Robinhood’s legal ranks have continued to grow. Within the past two months, the company has hired Exelon Corp. associate general counsel Cheryl Crumpton as a Washington-based head of litigation, regulatory enforcement, and investigations, and Margery Shanoff, a Rockville, Md.-based senior counsel in FINRA’s Department of Enforcement, as an assistant general counsel with the same portfolio.

Cara Bain, a former assistant general counsel at FINRA, joined Robinhood earlier this year to handle regulatory inquiries compliance. Robinhood’s S-1 discloses several inquiries it’s facing from state and federal regulators and notes that federal prosecutors in California executed a search warrant for the phone records of its co-founder and CEO Vladimir Tenev.

(Story updated throughout with more detail on Robinhood's lawyers.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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