Robinhood Regulatory Issues Test New Team After Lawyers Exit

Robinhood Markets Inc. will test a new in-house legal and compliance team as it faces lawsuits and regulatory scrutiny after outraged customers were barred from trading in GameStop and other stocks on the company’s platform last week.

Three top lawyers left the privately held online brokerage in January on the heels of three more notable legal and compliance exits late last year.

Archit Shah, Robinhood’s former general counsel; Nili Moghaddam, its former head of litigation and investigations; and Kirtan Mehta, senior counsel for global public policy, all left the company in January, according to their LinkedIn profiles.

Rich Jackson, a former senior director of finance at Amazon.com Inc. hired in 2019 to serve as vice president of risk and compliance, also departed last month. Jackson, who is not a lawyer, was previously a partner at KPMG LLP.

The departures came before Robinhood raised an additional $2.4 billion from investors Monday as it relaxed trading curbs on some stocks. The turnover comes at a challenging time for Robinhood, which faces at least 18 lawsuits in several states alleging improper restrictions on customers.

The Securities and Exchange Commission has said it will scrutinize decisions by online brokerages to halt buying during market mayhem last week that drove up the stock prices of companies like GameStop Corp. and AMC Entertainment Holdings Inc.

Robinhood didn’t respond to a request for comment about its legal and compliance changes, which took place in the months after the company installed new leadership of its in-house teams in those areas.

Head count has mostly remained flat year-over-year, reflecting an injection of new recruits, said a person familiar with the company’s legal and compliance operations.

“We have a great team in compliance and legal that we’ve been building out through the past year,” Robinhood co-founder and CEO Vladimir Tenev said in a Bloomberg TV interview last week. “We’ve been working with our regulators throughout the history of the company, and that obviously will continue.”

Robinhood Rear View

Mehta, a former associate at Winston & Strawn and Zuckerman Spaeder, recently became chief of staff for Sen. John Hickenlooper (D-Colo.). He had been a legislative aide to Sen. Joe Manchin (D-W.Va.) and director of federal affairs for Gov. Phil Murphy (D-N.J.) prior to joining Robinhood in 2019.

Shah, a former software engineer who went on to work at Kirkland & Ellis, a law firm that promoted him to non-equity partner in late 2015, joined Robinhood the following year as general counsel.

He and Jackson have not listed new employers on their LinkedIn profiles. Shah, Jackson, and Mehta didn’t respond to requests for comment.

Moghaddam, a former federal prosecutor who also once worked as an associate at Paul, Weiss, Rifkind, Wharton & Garrison, and as litigation counsel at Skadden, Arps, Slate, Meagher & Flom, joined Robinhood as an associate general counsel in 2018.

She became head of litigation and investigations at the company in 2019 and held that role until leaving Robinhood last month.

In an email, Moghaddam confirmed that she’s been hired as the first general counsel for Rally Rd., a startup fintech platform doing business as RSE Markets Inc. that lets users invest in collectibles like artwork, baseball cards, classic cars, and other memorabilia. She declined further comment.

Before the more recent reshuffling, Robinhood had other departures from its legal and compliance ranks late last year.

Smeeta Ramarathnam, a former Foley & Lardner associate who spent more than a decade at the SEC, joined Robinhood in 2018. She was promoted the following year to deputy general counsel and vice president for global regulatory and policy.

Ramarathnam’s LinkedIn profile shows she left Robinhood in September and is now on sabbatical. She didn’t respond to a request for comment about her departure.

John Castelly left Robinhood in October, more than a year-and-a-half after he was hired as chief compliance officer. His departure came roughly a month after Robinhood recruited Norman Ashkenas and Kelly Zigaitis to serve as compliance chiefs for Robinhood Financial and Robinhood Securities, respectively.

He is now chief ethics and compliance officer at Santa Clara, Calif.-based software company ServiceNow Inc. Castelly didn’t respond to a request for comment.

New Legal Regime

Daniel Gallagher Jr., a former SEC commissioner who was tapped by Robinhood to become a member of its board in 2019, took over last year as the Menlo Park, Calif.-based company’s new chief legal officer.

He replaced Anne Hoge, who left Robinhood at the end of May 2020 “to attend to an illness in the family,” the company said in a statement at the time.

Robinhood then embarked on a series of legal and compliance hires, including deputy general counsel Lucas Moskowitz and Christina Lai, principal counsel for litigation and investigations Erica Crosland, and associate general counsel for federal affairs Bethany Zorc, most recently head of public policy at Wells Fargo & Co.

Last month, Robinhood announced its addition of Anthony Cavallaro—a longtime executive at the Financial Industry Regulatory Authority—as its head of regulatory services and fraud oversight, reporting to Ashkenas.

Robinhood this year hired Agung Atmaja as tax counsel and state and local tax manager, Weilyn Wood as an associate general counsel for corporate, and Fontaine Yuk as assistant general counsel for employment. Atmaja is formerly of Ernst & Young LLP, while Wood and Yuk most recently worked in-house at Splunk Inc. and Dolby Laboratories Inc., respectively.

Pinal Shal, an attorney who specialized in data privacy and security at ride-sharing company Lyft Inc., joined Robinhood late last year as a behavioral engineer.

Robinhood’s online jobs board shows that it currently has legal openings for a new manager of federal affairs in Washington, a role similar to the one Mehta held, as well as a senior counsel for corporate and associate general counsel for product, both of which are located in its Northern California headquarters.

Fenwick & West has previously handled fundraising efforts for Robinhood, which has been valued at more than $11 billion. Farella Braun + Martel and Debevoise & Plimpton have collectively handled roughly 60% of the company’s federal litigation caseload within the past five years, per Bloomberg data.

Robinhood, which was founded in 2013 and received a $1 billion cash infusion last week at the height of the GameStop craze, is reportedly considering a potential initial public offering sometime this year.