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‘Flash Boys’ Led Robinhood Founders to Hide How Firm Made Money

  • Firm hid it sold client orders after Michael Lewis book: SEC
  • Robinhood settles case without admitting or denying claims
Robinhood Users Had Accounts Looted, Say There's No One To Call
Photographer: Gabby Jones/Bloomberg

Robinhood Markets became ubiquitous through a popular app that prompted millions of investors to start trading stocks. But unknown until now is that the brokerage feared author Michael Lewis’s seminal take down of high-speed traders might derail the business before it even got off the ground.

The revelation is buried in a Thursday Securities and Exchange Commission enforcement action that accused Robinhood of hiding for years how it made the bulk of its revenue: selling client orders to Wall Street securities firms. The company decided to obscure that fact after “Flash Boys,” Lewis’s 2014 book, portrayed it as questionable conduct that can hurt mom-and-pop investors.