New Young Investors Could Be The Lifeblood: Cramer On Robinhood, SEC Fine

Jim Cramer shared his first thoughts on the market Thursday morning with a focus on Robinhood.

Cramer on Robinhood: Robinhood was charged by the SEC with misleading customers about revenue sources.

“New young investors could be the lifeblood,” Cramer said. He questioned when the last time was that the market saw such an influx of new investors.

Cramer wishes the froth could be eliminated and just focus on the new investors that are joining the market.

“Young people have their whole lives ahead of them,” he said, noting they're more willing to take risks with trading and investing as a result.

Breaking news came during Cramer’s discussion that Robinhood would be settling with the SEC. Cramer said it was smart for Robinhood to settle and get this behind them.

“Get some controls in there," he said. "Just because it's automatic and free, doesn’t mean you don’t have to disclose.”

Related Link: Robinhood Aims For Potential IPO In 2021: Report

SEC Charges and Fine: The SEC charged Robinhood with “misleading customers about revenue sources and failing to satisfy duty of best execution.”

The SEC complaint came from the 2015 to 2018 time period when Robinhood had omissions in customer communications including its FAQ pages. The company did not disclose its largest revenue source was payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution.

Robinhood is agreeing to pay $65 million to settle the charges. The company is not admitting or denying the charges.

Robinhood also agreed to retain an independent consultant to review its policies and procedures for customer communications.