SIPC Says It Has Serious Concerns About Robinhood’s New Product

The Securities Investor Protection Corp. said a new checking account from Robinhood Financial LLC raises red flags and that the deposited funds may not be eligible for protection.

Robinhood, a no-fee stock trading app, rolled out its take on the traditional bank account Dec. 13, promising a 3 percent interest rate on deposits. The Checking & Savings service will be run through the firm’s brokerage arm rather than a bank, which would be insured by the Federal Deposit Insurance Corp. Robinhood said the service will be insured by the SIPC.

“I disagree with the statement that these funds are protected ...