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

Checking and savings on the Robinhood app.

Checking and savings on the Robinhood app.

Photographer: Andrew Harrer/Bloomberg

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 Thursday, 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.