Robinhood Markets Inc. bought back $605.7 million of company stock that had been controlled by Sam Bankman-Fried and was caught up in a contentious ownership fight.
(Bloomberg) — Robinhood Markets Inc. bought back $605.7 million of company stock that had been controlled by Sam Bankman-Fried and was caught up in a contentious ownership fight.
The purchase from the US Marshal Service, which was completed on Thursday, involved about 55.3 million shares of the company’s Class A common stock that had been seized by the government, Robinhood said in a regulatory filing Friday. The purchase price was $10.96 a share, according to the filing.
Emergent Fidelity Technologies Ltd., an entity that was previously controlled by Bankman-Fried and filed for bankruptcy protection in February, acquired a stake of more than 7% in Robinhood last year. The brokerage’s board authorized the firm to “pursue purchasing most or all” of those shares, the company said in February.
The shares had been caught up in a contentious ownership fight between FTX, the bankrupt crypto lender BlockFi Inc., and Bankman-Fried himself. BlockFi has argued that the Robinhood shares were pledged to it by Emergent as loan collateral. The Department of Justice previously asked the parties to avoid litigating the issue in bankruptcy courts.
“There was no certainty that such a repurchase would be possible, and we believe the uncertainty around the outcome for such a significant number of shares had represented a near-term overhang for the stock,” JMP analysts led by Devin Ryan said in a note.
The stock, which has gained 37% this year, rose 2.8% to $11.19 as of 9:53 a.m. in New York.
Bankman-Fried is accused of orchestrating a multibillion-dollar, years-long fraud at FTX and Alameda Research, both of which collapsed last November. He has pleaded not guilty to all the charges against him. He had been under house arrest at his parents’ home in Palo Alto, California, since last December, after he was arrested in the Bahamas. His bail was revoked earlier this month.
–With assistance from Bre Bradham.
(Adds context of the stake, Robinhood share move, analyst commentary.)
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