PRovoke Media 11 Feb 2021 // 2:00PM GMT
MENLO PARK, CA — Facing considerable scrutiny — and 30-plus lawsuits — stock trading app Robinhood is calling on agencies to help manage the fallout from last month’s GameStop buying frenzy.
PRovoke understands that Robinhood is working with at least two communications firms, Zeno and digital firm MediaMonks, as it tries to get control of the PR crisis that blew up when the platform restricted users’ ability to buy GameStop stock, the price of which they drove up at the expense of short sellers on Wall Street. MediaMonks helped Robinhood craft the Super Bowl spot it ran Sunday, touting the platform’s aim of opening up investing to all.
Robinhood's in-house team includes corporate comms lead Nora Chan, product comms lead Lavinia Chirico and corporate relations lead Josh Drobnyk, all of whom work under the watch of CMO Christina Smedley, a former Facebook communications leader who joined Robinhood in August to build an integrated marketing and communications function. Business Insider reports the platform also turned to the firm Joele Frank last year for PR support.
Now faced with additional scrutiny from legislators and regulators, Robinhood has hired two in-house Washington lobbyists, Beth Zorc and Lucas Moskowitz, as well as Mary Elizabeth Taylor as head of external affairs, according to Politico. The company also has relationships with four outside lobbying firms it engaged last fall.
Robinhood's troubles stem from a series of events in January that led to the platform temporarily curtailing users' ability to buy GameStop shares after they purposely drove up prices, largely through a coordinated effort organized on Reddit.
The move infuriated users, saying they were unfairly cut off from making purchases while hedge fund managers were allowed to continue — a repudiation of Robinhood's tenet of democratizing investing. Reddit referenced the movement during its own Super Bowl spot, a five-second ad that ate up the site's entire marketing budget.
Robinhood's actions also came under fire from lawmakers, who have since scheduled hearings into the incident for later this month, as well as regulators — who are no strangers to Robinhood. In December, the company agreed to pay the SEC $65 million to settle charges that it misled customers about revenue sources.
The platform also faces several legal challenges.
A class-action lawsuit, quickly launched by a Robinhood user after the incident, alleges that the platform purposely imposed the restrictions to "manipulate the market for the benefit of people and financial institutions who were not Robinhood's customers."
And there are many more. According to Law Street, Robinhood faces a total of 33 GameStop-related lawsuits, most of which allege securities violations, breach of contract, antitrust, and fraud.
On Monday, Robinhood was also hit with another blow, when the parents of a 20-year-old man who killed himself believing he lost $730,000 on Robinhood filed a wrongful death suit, alleging that the company encourages young and inexperienced users to make risky moves — and provided “no meaningful customer support” when the man needed it, according to CBS News.
At that time of Smedley's arrival, the trading platform was valued at $11.7 billion. In December, however, Reuters reported that Robinhood’s value could be more than $20 billion by the time it goes public later this year.
Representatives from Robinhood, Zeno and MediaMonks all declined to comment.