Casten Continues Fight To Hold Robinhood Accountable, Introduces SEC Disclosure Effectiveness Testing Act
Casten Continues Fight To Hold Robinhood Accountable, Introduces SEC Disclosure Effectiveness Testing Act
Washington, DC (July 21st, 2022) – Today, U.S. Representative Sean Casten’s (IL-06) continued his work to protect investors by reintroducing the SEC Disclosure Effectiveness Testing Act. The bill is part of Casten’s hard-fought initiative since 2020 to protect young investors like Alex Kearns, the 20-year-old Naperville native who died by suicide after Robinhood showed an incorrect negative balance of more than $750,000 to his account.
The SEC Disclosure Effectiveness Testing Act, Casten’s first piece of legislation to pass the House in the 116th Congress, would require the Securities and Exchange Commission (SEC) to ensure main street investors – including those on day trading apps like Robinhood – have the information they need to invest their savings safely. The bill would require the SEC to engage in usability testing of its new and existing disclosures intended for retail investors in the form of qualitative interviews and surveys.
Casten has been the Congressional leader against Robinhood’s failure to protect investors since June 2020, when Alex Kearns, a 20-year-old-resident of the Naperville Illinois community Casten represents, died by suicide after seeing a negative balance of more than $700,000. In a suicide note, Kearns named Robinhood, asking how it allowed a novice trader to get into that position.
Earlier this week, Rep. Casten questioned Gurbir S. Grewal, Director of the Division of Enforcement at the SEC on the steps they are taking to protect investors from fraud manipulation, and abuse from companies like Robinhood. You can watch his questioning here or by clicking the image below:
After Casten learned that Robinhood failed to respond to Alex Kearns repeated inquiries and, at that time, did not have a customer support phone number for Alex to call, he led his Congressional colleagues in efforts calling on Robinhood directly to improve transparency and user safety and urging federal regulators at SEC and FINRA to take action to protect investors, before grilling Robinhood CEO Vlad Tenev when he appeared before the House Financial Services Committee in February.
In March, Casten pushed SEC Chairman Gary Gensler to update regulation to protect investors during the third House Committee on Financial Services ?Committee (FSC)hearing on Gamestop, digital platforms, and retail investors. Casten pointed out incentivizing retail investors to trade frequently is usually not in their best interest. In July, Casten’s Trading Isn’t a Game Act passed the House Financial Services Committee on the same day as Robinhood’s Initial Public Offering.
You can read the text of the SEC Disclosure Effectiveness Testing Act here.
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