The head of the nonprofit insurer that protects investors from losses in the event a brokerage fails said Friday he was as surprised as anyone to hear about Robinhood's plans to offer checking and savings accounts for 3 percent interest.
SIPC President and CEO Stephen Harbeck told CNBC he has serious concerns about the plan, and has contacted the Securities and Exchange Commission's trading and markets division about it. The SEC could talk to Robinhood about it as early as Friday, he said. Robinhood had not yet contacted SIPC, he added.
The issue has "profound significance" for the financial services industry, Harbeck said.
Robinhood announced on Thursday it would offer no-fee checking and savings accounts alongside its brokerage accounts, with an enticing 3 percent annual interest rate. It was seen as a shot across the bow of traditional banks.
On Robinhood's website, it explains that users need to sign up for a Robinhood account to get the checking and savings accounts. But it says users do not need to invest to use the accounts, something Harbeck says is contradictory.
Brokerage firms often offer accounts for customers to hold cash until it can be invested in securities, but those accounts aren't meant to be strictly for savings, Harbeck said. Money sitting in such accounts but not intended to buy securities may not be covered by the SIPC, which insures accounts for up to $250,000 of cash in the case of a broker's failure.