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Robinhood repurchases $605 million worth of shares from Sam Bankman-Fried’s Emergent Fidelity Technologies

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TL;DR Breakdown

  • Robinhood buys back $605 million in shares from Sam Bankman-Fried’s bankrupt company, Emergent Fidelity Technologies.
  • The buyback occurs as Sam Bankman-Fried prepares for a trial in October with a costly defense team of expert witnesses.

Description

Robinhood has successfully repurchased $605 million worth of its shares from Sam Bankman-Fried’s Emergent Fidelity Technologies. The share repurchase agreement received approval from the U.S. District Court for the Southern District of New York on August 28, according to a filing with the U.S. Securities and Exchange Commission (SEC) dated August 30. The share buyback … Read more

Robinhood has successfully repurchased $605 million worth of its shares from Sam Bankman-Fried’s Emergent Fidelity Technologies. The share repurchase agreement received approval from the U.S. District Court for the Southern District of New York on August 28, according to a filing with the U.S. Securities and Exchange Commission (SEC) dated August 30.

The share buyback involved Robinhood repurchasing over 55 million shares from the United States Marshal Service, which acted on behalf of the government. Each share was priced at $10.96. Robinhood’s Chief Financial Officer, Jason Warnick, expressed satisfaction with the completion of the share purchase, stating that the company looks forward to executing its growth plans for the benefit of its customers and shareholders.

Emergent Fidelity Technologies filed for bankruptcy in February

Emergent Fidelity Technologies initially acquired Robinhood shares in May 2022 but filed for bankruptcy in February this year.  Robinhood had disclosed its intent to buy back the shares earlier in the year during its fourth-quarter earnings call. At that time, the board of directors had authorized the company to “pursue purchasing most or all of the 55 million remaining Robinhood shares” acquired by Emergent. 

Multiple parties expressed interest in the shares, making the situation complicated. BlockFi also joined the list and filed a lawsuit against Emergent for attempting to take control of the Robinhood shares that BlockFi claimed were collateral. This happened after Alameda defaulted on loans.

The share repurchase comes at a pivotal time for Robinhood, which has been navigating various financial and regulatory challenges. The repurchase of shares from Emergent Fidelity Technologies, which had filed for bankruptcy, adds a layer of complexity to Robinhood’s financial portfolio. 

Meanwhile, Sam Bankman-Fried is set to face trial in October and is reportedly assembling a team of seven expert witnesses to bolster his defense. The experts, who will be compensated at $1,200 per hour, are expected to testify on various topics, including campaign finance regulations and the financial operations of FTX and its affiliated company, Alameda Research. The defense’s costs for these witnesses could reach an estimated $8,400 per hour. The government has filed a motion to disqualify these expert testimonies in a countermove, citing “various shortcomings” in their credentials and disclosures.

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