[HN Gopher] Robinhood to pay $70M for 'systemic supervisory fail...
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Robinhood to pay $70M for 'systemic supervisory failures'
Author : MikeDelta
Score : 222 points
Date : 2021-06-30 16:33 UTC (6 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| beambot wrote:
| When the "fine" is minuscule relative to profits and the bulk of
| it goes to a private company / self-regulatory organization
| (FINRA: [1]), it might be more accurate to label this a "bribe"
| for plausible deniability...
|
| [1]
| https://en.wikipedia.org/wiki/Financial_Industry_Regulatory_...
| elliekelly wrote:
| FINRA is the industry equivalent of a firm's Chief Compliance
| Officer. They're supposed to identify and correct issues at the
| expense of the industry rather than wasting the government's
| limited resources. FINRA conducts regular exams of all members
| the way a Compliance Officer will regularly examine all
| department functions. Whereas the SEC conducts random periodic
| exams (like an auditor), targeted exams (like an investigator)
| and occasionally "sweep" exams relating to the topic du jour
| (usually in preparing to issue to a new rule).
| asteroidbelt wrote:
| In 2020 RH revenue (not profits) was $682M, so $70M fine is
| definitely not "minuscule".
| beambot wrote:
| Gross profits, not net. Their net profit is probably
| negative, like most growth stage pre-IPO or recently-IPO tech
| companies. They were looking at IPOing at a $30B valuation.
| The fine is 0.2% of their anticipated market cap.
| asteroidbelt wrote:
| 0.2% of cap also looks significant for the first offense.
|
| What do you think would be an appropriate fine?
| beambot wrote:
| This isn't the first offense. They were fined $65M in Dec
| 2020 for similar infractions [1]. Clearly that wasn't
| enough to deter bad behavior. I'm a fan of exponential
| backoff. Pick an exponent. 3x-10x the last infraction
| seems reasonable (assuming similar levels of harm to
| users).
|
| [1] https://www.cbsnews.com/news/robinhood-sec-
| fine-65-million/
| asteroidbelt wrote:
| 3x exponential sounds right. Thank you for the context!
| z3ncyberpunk wrote:
| Nope, still pretty paultry.
| colechristensen wrote:
| "The penalty was the largest ever issued by the Financial
| Industry Regulatory Authority (FINRA), according to the agency."
| newfonewhodis wrote:
| I'm glad RH got fined, but this is a reminder that FINRA hasn't
| meaningfully fined the likes of Goldman, Morgan Stanley, HSBC
| or any other large brokerage.
| frakkingcylons wrote:
| All of those are investment banks.
| newfonewhodis wrote:
| ...yes, and?
| tptacek wrote:
| And they aren't a retail brokerage with customer service
| obligations to ordinary people. Their counterparties are
| sophisticated, which is a regulatory way of saying
| "mostly on their own here".
| [deleted]
| ProAm wrote:
| With the number of fines this company has occurred in its short
| existence Im very surprised they are still allowed to be a
| brokerage of sorts and will be allowed to go public.
| atatatat wrote:
| This headline is the Feds mea culpa for allowing that..
| Taylor_OD wrote:
| A drop in the bucket.
| jackson1442 wrote:
| While true, it'll definitely hurt RH more than they expected.
| They only set aside about $26M for this settlement.
| chews wrote:
| Also important to know FINRA kept the 57 million. They are the
| SRO but let's be honest they are the enforcement arm of the
| SEC.... but the government does not get to keep the fines.
| beefman wrote:
| Original source: https://www.finra.org/media-
| center/newsreleases/2021/finra-o...
|
| Yahoo! Finance: https://finance.yahoo.com/news/robinhood-hit-
| with-record-fin...
|
| Archived version of Reuters story: https://archive.is/NxI0t
| whoisjuan wrote:
| I always find surprising that Robinhood was able to build such a
| large business with such mediocre customer support.
|
| I switched to Charles Schwab and just the fact that there's a
| 24/7 phone number compensates for the lack of simplicity. I used
| to think that I wanted the simplicity of something like
| Robinhood. But I have learned to appreciate the complexity of
| Schwab. The reality is that behind Robinhood's simplicity there's
| a lack of sophistication and process in their operation.
|
| I commend what they built, but Robinhoood it's too exposed to the
| cross winds of retail trading and regulatory scrutiny. I feel
| that by having my investments in Robinhood, I'm adding some sort
| of risk multiplier that has nothing to do with the nature of my
| investments. It has to do mainly with how amateur-ish their
| brokerage operation feels.
| ramesh31 wrote:
| >I always find surprising that Robinhood was able to build such
| a large business with such mediocre customer support.
|
| This is the standard people have become trained to expect.
| Google does the same thing. The idea is basically that a
| certain level of scale, you can completely ignore customer
| support. There's always new users signing up, and placating any
| single one is no longer worth your time.
|
| Anyone who does serious trading knows the value of actual 24/7
| human customer support, and uses a platform like Schwab or
| Fidelity. But Robinhood is arbitraging the naivety of the
| millions of people who've never invested.
| bawolff wrote:
| I've never used customer support (for consumer software) that
| was actually worthwhile, so not missing much.
| standardUser wrote:
| I can't imagine anyone doing "serious trading" using
| Robinhood. I also can't imagine a scenario where I would need
| to talk to a customer support rep at Robinhood. What kind of
| support might I need while occasionally placing limit buy and
| sell orders?
| andrewmutz wrote:
| If consumers are not willing to pay for the product, it makes
| sense that they would not get good customer service. The
| users are not customers of Robinhood or Google. The users are
| the product that Google sells to advertisers and Robinhood
| sells (in the form of data) to hedge funds and HF traders.
|
| Schwab and Fidelity can deliver a good product with good
| customer service because users pay money for the product and
| are actually customers.
| fumar wrote:
| That is right Google operates under the assumption of people
| as in large groups of individuals. Their primary drive is to
| add billions of more people to their graph,
| https://nextbillionusers.google
|
| If you read through the marketing material, you will notice
| that they use the word people and not individuals or persons
| or you. "People are at the center of everything we build."
|
| For what is worth, Fidelity customer service is quick and
| reliable. They've always answered by questions or solved my
| issues over the phone.
| hef19898 wrote:
| During my time at Amazon we used to joke about an, alleged,
| Bezos quote: He hates CS and wished he could live without.
| The narrative was, that operations weren't good enough to
| make CS unnecessary. Well, it sometimes seems it was just a
| question of scale, as you said. And maybe Amazon is just
| figuring out whether or not they can get away with it, little
| by little.
| duped wrote:
| > I always find surprising that Robinhood was able to build
| such a large business with such mediocre customer support.
|
| Because the interface is much easier to use. Particularly for
| options, which are dangerously easy to trade with Robinhood
| compared to their competitors like Think or Swim.
| sitzkrieg wrote:
| it is misleading really. so many people who didnt understand
| legged , or options in general got into really bad positions
| which is hilarious to watch the revolving door
| rajup wrote:
| While I am really glad Robinhood existed back when I started
| working to introduce me to investing, their amateurish ops (see
| their outages in the past few years) and customer support (they
| managed to bungle a position transfer costing me a few hundred
| bucks) pushed me to more established players. Most of these
| established players now have low to zero commissions with much
| better customer support, order execution etc. I doubt any
| serious investor uses (or should be using!) Robinhood.
| hangonhn wrote:
| I've been a long time critic of RH but you can see the value to
| their business. They mainly target millenials who are largely
| shut out of the investment market because of their poor
| financial situations. Tiny portfolios and game-ified trading is
| a good way to capture that audience. Millenials won't stay poor
| forever so RH's customer base is actually quite valuable. A
| more mature company can either acquire RH for those customers
| or RH itself can transform into a more stable and reliable
| operation with a large customer base that will acquire more
| assets over time.
| Grim-444 wrote:
| I don't really buy this argument, since you can sign up at
| most traditional brokerages for free, with no minimum
| balance, and zero or almost zero trading fees on most trades.
| There's absolutely no more barrier to entry than with
| Robinhood.
| hangonhn wrote:
| Agree with you on that. I don't see any advantages to RH at
| all but they were the first to really target that group and
| has already acquired them as users. That group of users is
| worth a lot and will be worth even more over time.
| kyawzazaw wrote:
| Robinhodd started that push, no? They were comission based
| before
| hef19898 wrote:
| IMHO targeting financially less than robust people with a
| gamified solution is a real problem. An not a feature.
| hangonhn wrote:
| 100% agree with you. Not at all condoning their business
| practices. I'm just saying their business has value because
| of their large customer base that they've already acquired.
| Its a customer base that becomes more valuable over time as
| millenials become wealthier and acquire more assets.
| toastal wrote:
| I love that you get on a call with real native speaker in the
| US with Schwab; that part of customer support has been stellar.
| I like that they cover international ATM fees too.
|
| I don't care for how they handle security though. I really wish
| they supported WebAuthn or at least TOTP that didn't require
| Symantec's proprietary TOPT solution. I wish they supported PGP
| for messages as well (I know those GMail users are having their
| financial data read by Google). When I asked about what
| "SchwabSecure" really is and what sort of encryption they use
| gave me marketing fluff, even stating "The reason you may not
| find more detailed information available online which supports
| this is so that we can prevent criminals from obtaining this
| information, and using that to get a foothold"--as opposed to
| my recent evaluation of email providers to see the competition
| who could provide the MOST transparency about how they set up
| their security.
| websap wrote:
| "I love that you get on a call with real native speaker"
|
| Wow! Seriously? How do you feel the same way about the people
| you work with, if they aren't native speakers?
| tick_tock_tick wrote:
| Talking over the phone, which doesn't have great voice
| quality to begin with, about a potentially stressful and
| time critical situation is not something accents help with
| there is nothing wrong with that statement.
| websap wrote:
| How do you function in a remote first world, where most
| of your team joins calls over Slack or Teams? It's weird
| that someone painstakingly learnt English, but you don't
| can't put in the effort to listen and understand.
| wpietri wrote:
| A counfounder here is that a strong accent is correlated
| with outsourcing customer support to low-cost providers
| to companies with far-away, underpaid staff who lack
| cultural context and social power within the company they
| nominally work for.
|
| Personally, I think the much bigger problem is the shitty
| outsourcing. But semi-sensical corporatese excuse-making
| is definitely not improved by language and accent
| barriers.
| msrenee wrote:
| Thanks for expressing what I was trying to figure out how
| to put into words. I feel no animosity towards the folks
| stuffed in a call center for crap wages. I'm irritated
| with the company that outsourced their support to India
| and pays them crap wages to try to navigate technology
| that they don't have adequate training for and at least
| have no real power to fix.
| quacked wrote:
| This is such a ridiculous thing to get annoyed about. I
| work with a bunch of Croatians; do you _really_ think they
| prefer that I speak English (US), or would they like it
| more if I were fluent in Croatian?
| [deleted]
| l33t2328 wrote:
| Yes, it is also difficult to work with people in person who
| aren't native speakers, although over the phone is
| especially challenging.
| PascLeRasc wrote:
| You can extract the Symantec TOTP secret and use normal apps
| with it. This guide is from a reddit comment and I revised it
| slightly:
|
| 1. install pre-reqs: sudo pip install python-vipaccess &&
| brew install qrencode
|
| 2. Run: vipaccess provision -p -t VSMT
|
| This will print out all the information needed. Note the
| Symantec ID (it looks like VSMT12345678). It is what goes in
| the "Credential ID" field when adding a new device on
| Schwab's website.
|
| 3. Save the otpauth://... data into data.txt.
|
| 4. (Optional) Modify the issue=Symantec parameter to read
| issue= Charles%20Schwab Also change
| VIP%20Access:VSMT123456789 to your Schwab online banking
| username. These are purely aesthetic changes and will only
| make a difference in the label that shows up in the Google
| Auth app.
|
| 5. Run: qrencode -o qr.png -s 15 < data.txt to generate the
| QR image (qr.png) from your otpauth data file.
|
| 6. Scan qr.png with your TOTP app.
|
| 7. Go to Schwab -> Service -> Security Center -> Manage Two-
| Step Verification -> Add another Security Token and input the
| Symantec ID from step 3 (it looks like VSMT12345678) and the
| current rolling TOTP code from your TOTP.
| foo92691 wrote:
| > I wish they supported PGP for messages as well
|
| Does _anyone_ support PGP for messages?
| lrvick wrote:
| Even Facebook does. Facebook.
| gruez wrote:
| some crypto exchanges do
| jandrese wrote:
| The only major company I know that even has the option for
| PGP on email is Facebook. It works quite well and was
| pretty easy to set up, so long as you don't use a webmail
| client or your phone.
| jambalaya wrote:
| I love Schwab but agree on the security front. They tried to
| push everyone to use their voice auth for phone verification.
| I want more security not less lol. I remember several years
| ago, they didn't support special characters in passwords.
| Hopefully that has chanced.
| shkkmo wrote:
| The unlimited ATM fee reimbursement from Charles Schwab is
| amazing, especially for international travel. My brother just
| spent 3 years living in Australia and was able to withdraw
| from Charles Schwab and then deposit into his Australian
| account with zero fees and a better exchange rate than any
| other service available to him.
|
| If you are concerned about security, you can just leave a
| couple of hundred bucks in there for whenever you need cash
| and push funds to it from your main bank to top it up.
| Taylor_OD wrote:
| If you make trading as easy as playing candy crush you don't
| have to have good CS to get customers.
| jermaustin1 wrote:
| > such mediocre customer support.
|
| I agree 1000% with this. I "recently" switched from RH to ally
| since I already have a decent chunk of cash there, and I am
| STILL waiting on my cost-basis to transfer. It has been over 75
| days since they transferred my stock and cash, and every time I
| reach out to customer service they feed me the same canned
| response that due to volume of transfers it is taking longer
| than expected and they have no ETA on when my cost-basis will
| transfer.
| jackson1442 wrote:
| Same deal here, switched to Vanguard. After a few weeks I
| called in to ask about it and they offered to send a letter
| to RH on my behalf to get that information transferred. Sure
| enough, about 2 weeks later all my information was in
| Vanguard!
| MiddleEndian wrote:
| Baffling that the US financial market is simultaneously run
| by supercomputers built as close to the physical stock
| market as possible to reduce latency, and then also manual
| letters and people personally mailing checks and such.
| xyzelement wrote:
| Is it actually baffling? The computers do the very
| specific narrow set of operations (post order, match,
| accept fills, cancel) while the much broader range of
| "what else may come up" is less automated.
| whoisjuan wrote:
| This happened to me when I transferred to Schwab.
| Surprisingly it was Schwab the one that eased my mind. I
| called them and they put me through the cost basis department
| which told me that RH basically has to prepare the cost basis
| manaually and pass it to them/ They told me that it had been
| taking a while but that they were indeed receiving the Cost
| Basis for other customers.
|
| So I just had to wait. Of course this sucks because it blocks
| you from selling, but it will eventually show up.
| xyzelement wrote:
| Does it actually block you from selling? I think you really
| need to have the cost basis figured out for tax time - you
| sure Schwab won't let you? Even with a manual request?
| lumost wrote:
| Most consumers do not want to pick up the phone these days. I
| do not trust that an inbound phone number isn't just a spam
| call. I get concerned that the number I get when I google
| "schwab support line" will turn out to be a fake line setup on
| a good looking website designed to harvest personal details.
|
| I strongly suspect that the SaaS/consumer trend of having fewer
| human interactions will continue. The necessary caveat of this
| is that many firms will have less developed procedures for
| managing interesting situations.
| [deleted]
| Aea wrote:
| Okay, why not start with https://www.schwab.com? Their phone
| number is literally one-click away at the top of the site.
| pbreit wrote:
| Vast majority of customers prioritize cost and product over
| customer service.
| dillondoyle wrote:
| +2 for schwab especially investor checking card.
|
| Though they did have hiccups in trading peak GME/AMC.
|
| It's refreshing being able to chat, or call a native english
| speaking call center where they will bend over backwards to
| help, waive fees, etc. No offense meant to ESL speakers, but I
| think we've all experienced 'support' that is hard to
| understand and communicate. I can't even get TCF on the phone.
| foo92691 wrote:
| > I always find surprising that Robinhood was able to build
| such a large business with such mediocre customer support
|
| You must be new to the tech industry. :-)
| TeMPOraL wrote:
| Yup. The playbook of modern tech companies seems to be:
|
| 1. Solve the easy 80% of the problem.
|
| 2. Deploy that "solution" - which would _not_ be considered
| acceptable in just about any other industry - as widely as
| possible. Do not offer proper customer support.
|
| 3. Take the money you save on not solving the hard parts and
| not having customer support, and funnel it into marketing, to
| stimulate growth.
|
| 4. Continue until you fail, get acquired, or dominate the
| market.
|
| 5. If anyone asks what kind of outfit you're running, make a
| sad puppy face and say "scaling is hard!".
| gip wrote:
| While that's true, it may only be part of the story. There
| is a clear tension between "democratize X" (for Robinhood X
| is "finance for all") and offering a white glove service,
| including stellar support for everyone. It simply won't
| scale.
|
| Democratizing X also means commoditizing X by offering a
| minimum acceptable solution that will become what people
| are taught to expect. I am not sure there is a way around
| this to be honest.
| stouset wrote:
| Schwab and Vanguard are completely free if you're not
| trading individual stocks, which in complete bluntness
| _virtually no retail consumers should be doing_.
|
| Robinhood has gotten their position by invisibly and
| dramatically increasing the amount of risk assumed by
| their customers' life savings. Everybody's a savvy
| investor in a record-breaking bull market.
| WalterBright wrote:
| > virtually no retail consumers should be doing
|
| Yeah, well, I regularly read on HN about how retail
| consumers are locked out of investing in stocks, that
| only rich people can.
|
| Robinhood blew that argument out of the water.
|
| I've been a retail consumer stock investor my entire
| adult life, and would be pretty unhappy if regulations
| locked me out of that.
| smabie wrote:
| Saying no retail investor should be buying stocks is like
| saying no one should ever start a company.
| stouset wrote:
| The level of effort and personal commitment necessary to
| commit your life savings toward starting your own
| business vs. putting it all into meme stocks isn't even
| remotely comparable.
|
| One of these can be done in ten minutes from your couch
| while stoned with a handful of clicks. I'll leave you to
| guess which of the two it is, but suffice it to say
| that's the one I think should have some additional guard
| rails.
| TeMPOraL wrote:
| Agreed. And perhaps it's getting too philosophical, but
| one could argue that a big role of a government is to
| protect its citizens from everything that has a high risk
| of incurring sudden and effectively unbounded losses.
| Whether it's mandating installation of _actual_ guard
| rails through health and safety regulations, or
| regulating away business models that tend to make regular
| people broke by accident.
| imgabe wrote:
| You can buy individual stocks without yoloing your entire
| life savings into meme stocks.
|
| The movement to limit the most profitable investments
| only to "experienced" i.e. already wealthy investors is
| one thing that prevents average people from accumulating
| wealth.
|
| If an average person is allowed to walk into Vegas and
| put their whole life savings in black, or spend it on
| lottery tickets why shouldn't they be able to buy a
| stock? Less nanny state, please not more.
| IMTDb wrote:
| > Solve the easy 80% of the problem.
|
| The issue is that the current players are unable to solve
| that part properly.
|
| In my country, it was impossible to book a cab with an app
| before uber came.
|
| Yesterday, I tried knowing if my insurance covered some
| dental cost, and I was unable to sign up or login on the
| website, I had to call a human to book an appointment to a
| brick and mortar store. This is the biggest insurance
| provider in a western european country. I'll take the new
| "startup" as soon as it comes, just because they make 80%
| of what I need convenient enough. They can deal with the
| remaining 20% later, currently my 80% needs are not served.
| bobthepanda wrote:
| The problem with this is that if you hive off the 80
| percent that is easy and profitable you may also end up
| binning the competitors and then there is nothing for the
| 20 percent if the new competitor decides to do absolutely
| nothing.
|
| This is what happened when Craiglist and later Facebook
| cannibalized classified ads in the US; many local and
| hyperlocal newspapers disappeared because they were not
| big enough to attract major advertisers, but all the
| local ones left. Yet Craiglist provides no news at all
| and Facebook aggregates news but certainly doesn't
| produce any, and especially not at the local or
| hyperlocal level.
| navierstokes wrote:
| You left out "after you get big, hire a senior regulator
| from the Obama era to leverage personal connections in
| Washington."
|
| It's so depressing. It's probably better to not know how
| this stuff works.
| mkr-hn wrote:
| The government->business pipeline is older than any
| living president. It's not like all the companies who
| founded Silicon Valley on government contracts lucked
| into it.
| chickenpotpie wrote:
| https://en.wikipedia.org/wiki/1954_Guatemalan_coup_d%27%C
| 3%A...
|
| and the business->government pipeline when Eisenhower's
| advisors all used to work/currently work for The United
| Fruit Company
| mkr-hn wrote:
| It seems like any sufficiently advanced business is
| indistinguishable from government.
| dane-pgp wrote:
| In particular, a sufficiently advanced business looks
| like an undemocratic, authoritarian, central-planning
| government. Basically, the problem with large
| corporations is that they are communist dictatorships.
| TeMPOraL wrote:
| And here I thought that once you include boards and
| shareholders, you get something isomorphic to democracy
| :).
|
| If we're considering corporations to be "undemocratic,
| authoritarian, central-planning (...) communist
| dictatorships" inside, then so are _all democratic
| governments_. The "voice of the people" part of a
| democratic government is just a surface layer, the tip of
| an iceberg. Or, more charitably, a rudder of a ship - the
| part that sets the course, but is nevertheless
| insignificant in mass compared to the rest of the ship.
|
| The bulk of every government is a top-down hierarchical
| structure, because it can't really be any other way. You
| can't hold votes on whether a particular clerk is
| supposed to be in a particular building on Monday 09:00,
| and whether they're supposed to approve the form you're
| trying to submit.
| frenchy wrote:
| That would be an oligarchy, good sir.
|
| In a representative democracy you get a voice on who
| executes the orders regardless of whether you are rich or
| poor or smart or stupid or went to business school with
| who-knows-who.
| TeMPOraL wrote:
| That's true, and IMO, it's pretty much entirely the
| function of size. Modern governments are what you get
| when you try to organize millions of people - so it's not
| really surprising that, as a company grows, it starts to
| look like a government from the inside. It couldn't be
| any other way.
| imbnwa wrote:
| I'd put money on Amazon having sufficient power to
| control a number of desperate state governments at the
| least
| [deleted]
| navierstokes wrote:
| This is different from lobbying.
|
| How would you feel if the Nuclear Regulatory Commission
| soft-balled Mr. Burns, then one of its commissioners
| jumped ship to work at Springfield Nuclear?
|
| Even if that commissioner was an enlightened patrician of
| high moral character, it would create the appearance of
| corruption. And that alone is corrosive to the rule of
| law.
|
| People with less integrity, people downstream in
| industry, might interpret that as a signal that
| regulators are a joke. They may go on television and say
| things like "I don't respect the Nuclear Regulatory
| Commission."
| throwaway0a5e wrote:
| >How would you feel if the Nuclear Regulatory Commission
| soft-balled Mr. Burns, then one of its commissioners
| jumped ship to work at Springfield Nuclear?
|
| If I'm from New Hampshire, Ohio, Maine, South Dakota or
| somewhere else government is still kinda sorta
| accountable I'm Outraged(TM).
|
| If I'm from Massachusetts, Louisiana, California, New
| York, or somewhere else government has been unaccountable
| for generations I shrug and move on with life.
| bobthepanda wrote:
| Part of the issue, IIRC, is that you want regulators who
| are experienced with what an industry does, and
| practically speaking the easiest way to get that is to
| hire from within the industry. We should probably keep
| that bit of the revolving door working.
|
| The bigger problem is the reverse; we should really have
| the government do something like finance's "garden
| leave", where leaving employees are paid while banned
| from industry employment, so that whatever competitive
| info you had is outdated by the time you can take a job
| in industry again.
| giantg2 wrote:
| It's too bad sad puppy face doesn't work in year end
| reviews
| phone8675309 wrote:
| Depends on how close to the C-suite you are
| fumar wrote:
| Exactly, sad puppy face because my personal growth is my
| career growth and my career growth is my financial
| growth. So please more money.
| giantg2 wrote:
| I'm about as far away as one can be.
| MangoCoffee wrote:
| use the VC money to provide free service or subsidies the
| cost
| quacked wrote:
| You must work for my company!
|
| The primary issue is that these 5 steps _work_.
| hef19898 wrote:
| They do. Until VC money dries up. But even then it might
| go on...
| staticassertion wrote:
| VC money is unfathomable. It's not drying up any time
| soon. They may choose to shift it if there's some kind of
| crash, but it's too much money to just run out.
| jandrese wrote:
| VC money is top 1%er money. Because they are so
| overloaded with cash even really hairbrained stuff gets
| funded by someone looking for something, _anything_ ,
| that can beat the market.
|
| The VC market is basically medieval patronage with a
| capitalistic flair. Now the patrons are expected to bring
| you in massive returns instead of just producing culture.
| fleddr wrote:
| I do want to add some nuance to the salty and cynical takes
| here, even though I share the overall conclusion that tech
| support is terrible across the board.
|
| You can't compare a service like Robinhood (or Coinbase, the
| like) with a product like Google or Facebook:
|
| 1. Unlike these free services, at an exchange, you really are
| a customer. The business model is that you pay fees for
| transactions. That's not the same as a free "take it or leave
| it" situation. As a paying customer, it is far more
| reasonable and expected to get support.
|
| 2. The nature of the support queries are far more serious.
| This isn't about your Instagram app glitching, this is about
| money. People unable to access it, transactions not coming
| through, withdrawal errors, fiat/banking errors. All very
| serious matters where not only you expect support, you expect
| urgent support and typically human support.
|
| Now combine the above issues (true support needed, and much
| of it human support), we add the third and fatal ingredient:
| user growth. These services grow by at least a few million
| users per month.
|
| I don't know how many require support, but even a small
| percentage means you're on a constant hiring spree.
|
| Google and Facebook scale up by just not giving any support.
| How do you scale up this fast giving real support, so not
| just an FAQ or chat bot?
| mbesto wrote:
| Honestly this is varied.
|
| I've seen a bunch of (usually smaller or just starting) tech
| companies win out business because of how responsive their
| customer support even though their product was inferior.
|
| Robinhood won because it saw an opening in changes in market
| demands:
|
| - Increasingly lax SEC rules for retail traders.
|
| - Increases in income inequality whereby the poor side of the
| spectrum has been told they can't have access to the rich's
| set of investment tools (i.e. millennials with varying
| degrees)
|
| - Per transaction fees that made day trading appear less
| lucrative (see point before)
|
| - Competitors with terrible UIs for non professional traders
|
| Part of the reason the ETrade/Schwabs/TD's of the world
| didn't do what RH did was because it meant deliberately
| making creating a trading account more difficult. For example
| - Vanguard almost deliberately makes their service hard to
| day trader because they don't want to carry that risk
| profile.
|
| So, this was not a market that was crying for better customer
| service but one that wanted cheap, easy to use access to
| investments that were seemingly unattainable previously.
|
| I'm actually more surprised the SEC (or a class action
| lawsuit) didn't thwart RH turning into a large business when
| it was much smaller...not the competition.
| colordrops wrote:
| It wasn't that surprising - they just went after a new market,
| that being those who rarely if ever did any sort of investment
| or trading.
| tobinfricke wrote:
| It's not really an entirely new market, but definitely a
| "second wave" attempt to capture that market.
|
| Back in the Web 1.0 boom, seemingly dozens of online
| brokerages (ETrade, Ameritrade, Scottrade, etc) sprang up
| overnight to fuel easy consumer access to the "meme stocks"
| of the day (Pets.com, Yahoo, etc).
|
| Those are the new legacy players and I guess Robinhood is the
| new generation.
| gruez wrote:
| >I feel that by having my investments in Robinhood, I'm adding
| some sort of risk multiplier that has nothing to do with the
| nature of my investments. It has to do mainly with how amateur-
| ish their brokerage operation feels.
|
| In the sense that they'll collapse and you'll lose your
| portfolio, or that they'll be down at a critical time you want
| to make a trade? For a buy and hold type of investor, the
| latter isn't really a concern.
| hangonhn wrote:
| Even if they collapse you shouldn't lose your portfolio.
| These people
| https://en.wikipedia.org/wiki/Depository_Trust_Company keeps
| track of what you own.
| vageli wrote:
| Aren't there limits to the amount covered? Even the FDIC
| limits recovery amounts.
| gruez wrote:
| AFAIK DTCC provides zero coverage, that's handled by SIPC
| and is limited to 500k
| tedunangst wrote:
| Even if RH fails in some spectacular way, it'd be hard
| for all the customer assets to actually vanish. If you
| have 10000 shares of AAPL, but only 9000 shares are
| there, should still be good.
|
| For funsies, the open SIPC cases:
| https://www.sipc.org/cases-and-claims/open-cases/
| AznHisoka wrote:
| Beware that Robinhood also miscalculates wash sales, which
| they've admitted to me. I typically don't care about customer
| support, as I don't do a lot of trades, but messing up tax
| forms is a huge no-no for me.
| thebean11 wrote:
| Hmm, mess them up in whose favor? Robinhood messing it up
| seems like plenty of plausible deniability to not pay a
| penalty if you get audited..
| AznHisoka wrote:
| Mess them up in the IRS' favor, and it was clearly a
| mistake, and something they've had to fix for me.
| dataflow wrote:
| Could you elaborate on what scenarios it would get messed up
| in? I expect it would happen if you're working across
| multiple brokerages, but is there any other scenario? It'd be
| helpful for us to know and watch out for it.
| zzt123 wrote:
| Maybe I'm wrong and there's a better company that offers this,
| but the reason I use RH is so that I can trade both cryptos and
| regular securities out of the same account, with 0-day
| settlement on trades (without opening a margin account) since
| every RH account is an implicit margin account.
|
| I also like the instant deposits that scale with account size.
|
| RH's trading hours for securities is more limited than anyone
| else, but I don't find myself trading outside of those hours
| anyways.
|
| I also don't like their naive tax accounting and don't expect
| them to handle wash sales properly, which are two very big
| negatives, but I haven't found a better broker for my main use
| case.
| giantg2 wrote:
| A pittance
| underseacables wrote:
| Such a small amount, sure hope it doesn't cause the CEO to lose
| sleep.
| Marciplan wrote:
| This sounds like a lot but isn't this just a tiny hiccup
| Robinhood had to get out of the way for their IPO?
| cwkoss wrote:
| With the number of people still mad at RH at how they handled
| gamestop, I'm excited to see what sort of market shenanigans
| wallstreetsbets folks engage in once they IPO. I predict
| massive put volume.
| rdiddly wrote:
| They screwed up, but did they deserve the "largest penalty ever?"
| Established brokerage houses have gotten away with worse and paid
| less. Sounds an awful lot like another true real-life example of
| the very same r/WSB David/Goliath narrative the "established"
| part of the industry wishes it could discredit.
| cwkoss wrote:
| This is a better argument for more fees on established
| brokerages rather than reducing this fee.
| mym1990 wrote:
| Its so difficult to say what is going on behind closed doors
| when established brokerage houses get caught(or any brokerage).
| In many ways it makes perfect sense that an established firm is
| able to negotiate for more lenient penalties, much like an
| established lawyer might be able to negotiate for more lenient
| sentences.
| Vaslo wrote:
| I have to say that I agree. I think a punishment and/or fine
| should have been implemented. But $70M? Where does that money
| go anyway?
| elliekelly wrote:
| Egregious conduct is (and has been) punished by license
| revocation or revocation of FINRA membership. It may be the
| largest monetary fine ever levied but it certainly isn't the
| harshest punishment.
| smeyer wrote:
| >Where does that money go anyway?
|
| I believe that FINRA keeps its fines and uses it for
| operating expenses, which are also partially funded by annual
| fees paid by its members and maybe other funding sources.
| elihu wrote:
| 12.6 million goes to customers, according to the article.
|
| > Robinhood's resolution with FINRA includes $12.6 million in
| restitution to thousands of customers and a $57 million
| penalty, the largest in the regulator's history, and covers a
| range of issues dating back to September 2016, FINRA said in
| a statement.
| kevmo wrote:
| lol, 70M. All of these companies always get fines that don't even
| surpass the amount of money they made off faulty practices.
|
| People need to start going to jail for gross consumer failures.
| vptr wrote:
| If you send everyone to jail, how are you gonna collect the
| fines next time lol :D
| ZoomerCretin wrote:
| I was surprised to see that it was not related to their
| activities relating to the GameStop/short squeeze fiasco.
| edgyquant wrote:
| They didn't do anything illegal during that time. There is
| nothing illegal about restricting highly volatile equities
| pretty much every brokerage does this. Don't know how many
| times this has to be said here before people stop making this
| accusation
| duxup wrote:
| Assuming Robinhood's story was accurate that everyone was
| trading on margin (at least by default and thus a lot of
| traders) and that they were approaching some serious questions
| about if they had enough cash on had to cover the trades /
| possible losses ... I'm not sure what the right thing to do in
| that case would be.
|
| Keep everyone trading and possibly run out of cash to cover
| everything? Or stop trading and possibly hose the folks trying
| to make trades?
| jw1224 wrote:
| > Assuming Robinhood's story was accurate
|
| There have been several Congressional Hearings since
| January's drama, and something definitely doesn't add up.
|
| Robinhood's CEO stated, under oath, that they switched off
| buys of GME following discussions with the DTCC.
|
| In a later hearing, the head of the DTCC stated -- again,
| under oath and on the record -- that Robinhood's decision was
| entirely their own, and they had never spoken with Robinhood
| about it.
|
| Someone is lying.
|
| I would urge anyone interested in this (ongoing) saga to read
| this excellent investigative journalism piece here:
|
| https://prospect.org/power/how-the-gamestop-hustle-worked/
| nrmitchi wrote:
| > Someone is lying.
|
| Or, both people are stating the story from their side, and
| there is context missing.
|
| Robinhood: "We switch off after discussions with the DTCC
| [about increased reserve requirements which we could not
| meet]"
|
| DTCC: "It was entirely their decision, we never spoke to
| them about [the explicit actions they would have to take.
| It's definitely a coincidence that most other brokers did
| the exact same thing]"
| duxup wrote:
| I agree. I don't think the description necessarily means
| someone is lying.
| jw1224 wrote:
| It's clearly ambiguous. Retail investors were screwed
| over by _someone_ , and there are thousands of people
| still following the situation, demanding answers.
|
| Take a read of that article I linked, it gives an
| excellent and impartial summary of many of the conflicts
| of interests affecting all parties involved. It also
| brings up numerous issues I never see discussed here,
| given most people are only aware of the "mainstream
| narrative" -- there is much more evidence being uncovered
| than most people are aware of.
| 6gvONxR4sf7o wrote:
| > Retail investors were screwed over by someone
|
| That doesn't seem clear. Possible, but not for sure. Too
| much of this reads like hardcore conspiracy theorists,
| but maybe that's just biasing me against the legit bits.
| nrmitchi wrote:
| My suspicion, which I don't have data to support, is that
| retail investors where largely screwed over by other
| retail investors.
| JustinAiken wrote:
| Other retail investors weren't the ones that disabled the
| buy button.
|
| Of course artificially removing all demand is going to
| tank the price.
|
| Retail got screwed, and it wasn't by retail.
| tedunangst wrote:
| They disabled the buy button when GME was over 400. But
| now the buy button is back and you can get twice as many
| shares for the same money. Sounds like a bargain!
| atatatat wrote:
| On and off record discussions are two totally different
| things!
|
| And that's exactly why ALL financial instruments & systems
| should operate publicly, transparently.
| sushid wrote:
| They could have also said that they'll stop giving everyone
| secret margin trading accounts and tell users that any trade
| (due to market volatility) will take 2-3 days to close.
| gruez wrote:
| The secret margin accounts is a red herring. They need to
| put up deposit with the DTCC even for stocks that's
| "paid"[1] with settled funds, and they can't use customer
| funds for it. So if you bought 1 share worth $100 and the
| deposit requirement was 100%, then robinhood has to come up
| with $100 of their own cash (or borrow it from someone) to
| fulfill the trade.
|
| [1] quotes used because settlement actually happens 2 days
| after the trade is made.
| greenshackle2 wrote:
| The issue is not just trading on margin, it's trading with
| unsettled funds, which you can do in a non-margin account,
| because it's a non issue 99.999% of the time.
|
| Because of T+2 settlement when you buy/sell stock the actual
| exchange of shares and money only happens 2 business days
| later. If you sell a stock and then buy a different stock the
| same day you're trading with money that technically is not in
| your account yet, even in a cash account.
|
| It's fine because you wrote promissory note to pay $X in 2
| days, but you're also holding a promissory note saying you
| are owed >=$X in 2 days. (And promissory notes to
| receive/deliver the respective shares). And there's a central
| clearinghouse enforcing this.
|
| But part of the reason why it's low risk is that the
| clearinghouse requires brokers to put up large amounts of
| cash as collateral to ensure they can pay all their
| promissory notes even if they go bust. They are fairly
| conservative in their collateral requirements.
|
| So when all your customers are trading a highly volatile
| stock with a notoriously high rate of failure to deliver
| (this is a whole other discussion), the clearinghouse gets
| antsy and may ask you to put up ridiculously large amounts of
| cash as collateral.
| gruez wrote:
| >Because of T+2 settlement when you buy/sell stock the
| actual exchange of shares and money only happens 2 business
| days later. If you sell a stock and then buy a different
| stock the same day you're trading with money that
| technically is not in your account yet, even in a cash
| account.
|
| It's to do with T+2 settlement, but not with unsettled
| funds (funds you got from selling a stock, but hasn't
| settled yet). Basically, even if the funds were settled
| (eg. it's been sitting in your account for years), your
| broker has to put up the deposit on the day of trade, but
| can't use your money to do it. So if you bought $100 worth
| of shares and the deposit requirement was 100%, then your
| broker has to come up with $100 of their own cash (or
| borrow it from someone) to fulfill the trade.
|
| https://finance.yahoo.com/video/heres-why-robinhood-
| restrict...
|
| >but our clearing firm simply cannot afford the cost to
| settle those trades. We cannot use customer funds to front
| that cost due to regulation. So the brokerages or the
| clearing firms have to go into their own pockets to do it.
| And they simply can't afford the cost of that trade
| clearance.
| SilasX wrote:
| Say what? Why would brokers need to put up their own
| collateral to back customers' long-settled cash? Because
| if the risk (to the rest of the market) that the broker
| doesn't actually have that cash? That seems seriously
| messed up.
| greenshackle2 wrote:
| Oh, I didn't know that, that's even worse for them, it
| means all customer Buys are done on 2-day credit,
| basically.
| ZoomerCretin wrote:
| Other brokers without liquidity issues enacted similar
| policies. But you're right, the fault doesn't lie with them.
|
| The blame should go toward the DTCC who increased their
| margin requirements on buyers for seemingly no reason other
| than to coerce everyone into stopping retail investors from
| squeezing the rich shorts.
| gruez wrote:
| >DTCC who increased their margin requirements on buyers for
| seemingly no reason other than [...]
|
| ...except credit risk
|
| https://www.bloomberg.com/opinion/articles/2021-01-29/reddi
| t...
|
| >[T+2 settlement] means that the seller takes two days of
| credit risk to the buyer. I see a stock trading at $400 on
| Monday, I push the button to buy it, I buy it from you at
| $400. On Tuesday the stock drops to $20. On Wednesday you
| show up with the stock that I bought on Monday, and you ask
| me for my $400. I am no longer super jazzed to give it to
| you. I might find a reason not to pay you. The reason might
| be that I'm bankrupt, from buying all that stock for $400
| on Monday.
| ZoomerCretin wrote:
| The future price of the stock has nothing to do with
| anything. If I want a $400 stock, and you agree to sell
| it to me for $400, it is a done deal, is it not? The
| order is filled, regardless of settlement time or future
| price changes.
| gruez wrote:
| >The future price of the stock has nothing to do with
| anything
|
| The quote in my previous comment covers that,
| specifically:
|
| >I am no longer super jazzed to give it to you. I might
| find a reason not to pay you. The reason might be that
| I'm bankrupt, from buying all that stock for $400 on
| Monday.
| ZoomerCretin wrote:
| Yes, I read it. You can't cancel an order in settlement
| because you're "no longer super jazzed", else every order
| where the stock price increased would be cancelled by the
| seller so they could sell again at the higher price. Do
| you have any evidence that orders can be cancelled in
| settlement?
| gruez wrote:
| >Do you have any evidence that orders can be cancelled in
| settlement
|
| It's not that they'll show up and say "on second thought
| I don't want that stock anymore, please cancel my order".
| It's that they'll go bankrupt in the meantime. This was
| already mentioned in the original comment.
|
| >The reason might be that I'm bankrupt
| SilasX wrote:
| The broker doesn't have some way to credibly lock up the
| money so the buyer can't back out, regardless of
| jazzedness or bankruptcy status?
| gruez wrote:
| >The broker doesn't have some way to credibly lock up the
| money
|
| They do, that's what the collateral is for. From the
| linked article:
|
| >The way that stock markets mostly deal with this risk is
| a system of clearinghouses. The stock trades are
| processed through a clearinghouse. The members of the
| clearinghouse are big brokerage firms--"clearing brokers"
| --who send trades to the clearinghouses and guarantee
| them. The clearing brokers post collateral with the
| clearinghouses: They put up some money to guarantee that
| they'll show up to pay off all their settlement
| obligations. The clearing brokers have customers--
| institutional investors, smaller brokers--who post
| collateral with the clearing brokers to guarantee their
| obligations. The smaller brokers, in turn, have customers
| of their own--retail traders, etc.--and also have to make
| sure that, if a customer buys stock on a Monday, she'll
| have the cash to pay for it on Wednesday.
|
| The catch here seems to be that the broker can't use
| customer funds for collateral (see my other comments in
| this thread), so the broker has to come up with the money
| themselves by drawing on lines of credit. If those lines
| of credit run dry, then they can't take any more orders.
| tedunangst wrote:
| It's a done deal until your $400 doesn't show up two days
| later, and then what?
| nrmitchi wrote:
| Robinhood is and has been manipulative and predatory for
| _years_.
|
| Arguing that Robinhood did illegal things "for the benefit of
| their banking partners" or whatever other conspiracy theory
| you're suggesting is just that, a conspiracy theory.
|
| Let Robinhood be punished for the terrible things they have
| actually done instead of pointing at provably-false boogeymen.
| MikeDelta wrote:
| He didn't say anything about a conspiracy.
|
| Brokers have a duty of care and I can imagine Finra
| investigating if they took good care of their clients during
| this period, no matter the reason behind it.
| nrmitchi wrote:
| Suggesting that a group should be investigated for "their
| actions" without providing any specifics is straight out of
| the conspiracy-theory playbook.
|
| Any rebuttal is easily countered with "that's not the
| action I was talking about. I was referring to their other
| illegal actions."
|
| You're setting up a non-falsifiable argument, which is the
| basis of a conspiracy theory. You're throwing out non-
| specified accusations and expecting your non-specified
| accusations to be disproven.
| throwawaysea wrote:
| I'm out of the loop on what Robinhood did, and the news
| articles on this fine seem to be a bit vague. What did they
| do that is manipulative and predatory?
| nrmitchi wrote:
| I'm just going to go off the top of my head here.
|
| 1. They released a "checking account" that they claimed was
| FDIC and/or SPIC insured when it was not. (yes, they backed
| off of this one when they got caught).
|
| 2. They've gamified buying/selling stocks using addictive
| dark patterns (like confetti explosions). FOMO-inspiring
| push notifications are another example here.
|
| 3. They have such a terrible level of support for a product
| which involves people's real money.
|
| 4. They let people start trading options without any of the
| due-diligence typically performed.
|
| 5. They released an initial options product which was quite
| literally "Do you think this stock is going to go UP or
| DOWN?"
|
| 6. Their entire product is based on people having margin
| accounts that do not know that they have margin accounts.
|
| 7. Their Payment for Order Flow is (or at least was)
| _significantly_ higher than industry standard.
|
| Overall, their business model is taking a variety of
| complex financial instruments and wrapping them up in
| lipstick to sell to people who overwhelmingly do not
| understand the thing they are actually buying (or selling).
|
| I'm sure I'm forgetting a couple but I'm also multi-tasking
| at the moment.
|
| _Edit_ :
|
| I forgot about the "infinite money" "glitch", which was a
| situation explicitly called out in regulation as prohibited
| (regarding counting outstanding margin credit as assets
| when calculating margin credit)
| dntrkv wrote:
| Many of your points were being lauded as good things just
| a year ago. "Robinhood made advanced financial
| instruments accessible to the average Joe" now that the
| average joe has continuously shot himself in the foot,
| people are realizing it might not have been the best
| idea.
| nrmitchi wrote:
| > Many of your points were being lauded as good things
| just a year ago
|
| I'm sure some people did.
|
| I personally have _never_ said these were a good thing,
| and am still not saying they were ever a good thing.
|
| > Robinhood made advanced financial instruments
| accessible to the average Joe
|
| This is definitely a very charitable interpretation of
| what I said.
| dane-pgp wrote:
| How's this for some proposed legislation/regulation:
| Anyone who wants to use a share trading service has to
| first complete a one month "training period" where they
| use the service with virtual money only. The UI would be
| exactly the same, but you couldn't top-up or cash-out
| your balance.
|
| The catch, though, is that you "fail" this training
| period if you don't make a profit (or enough trades)
| during that month. You are also prevented from attempting
| another training period with that service (or any other
| service) for another 11 months.
|
| This would have the dual effect of locking out the large
| proportion of users who don't know what they are doing,
| and also preventing a sudden influx of users from taking
| advantage of (or falling victim to) some meme scheme that
| generates a lot of short-term media attention.
| greenshackle2 wrote:
| > 7. Their Payment for Order Flow is (or at least was)
| significantly higher than industry standard.
|
| Just to elaborate a bit, with payment for order flow the
| broker essentially gets a kickback for executing a trade
| with a particular firm. They pass on part of the kickback
| to the customer as a rebate, and keep some of it for
| themselves.
|
| Robinhood was (is?) keeping a bigger cut for themselves
| than other brokers who do payment for order flow
| (practically all retail brokers at this point, I guess),
| _while advertising that they have the best execution_.
|
| If I remember right, they didn't get dinged for keeping a
| bigger cut because that's not necessarily illegal, they
| got dinged for lying about it - you can't say you have
| _the best execution in the industry_ if you 're taking
| more hidden fees than everyone else.
| alexander-litty wrote:
| The FDIC-insured nonsense alone perplexes me. There is no
| web to spin here that favors them.
|
| Did they really think they could get away with this? Or
| did they have a severe cascade of miscommunication? It is
| incredibly irresponsible and careless behavior either
| way.
| [deleted]
| ZoomerCretin wrote:
| They are paid to route their order flow through the same
| firm that is heavily invested in shorting GameStop. The
| specific action I'm referring to is the banning of buying
| any more shares of $GME. Assuming everyone was playing by
| the rules, there should be no reason why margin
| requirements would increase for buyers of a stock but not
| for the shorts whose collective positions had recently
| become net-negative in the $10,000,000,000+ range.
|
| Robinhood may have simply been coerced to do this, but
| regardless, it eroded my trust in their ability to provide
| me with any share I want in any quantity I can afford. I
| and many other retail investors switched to bigger firms
| that won't have liquidity issues, or enact arbitrary
| restrictions on stock purchases because of those issues or
| their close relationships with the billionaires on the
| other side of the trade.
| gruez wrote:
| >there should be no reason why margin requirements would
| increase for buyers of a stock but not for the shorts
|
| source for margin requirement only increasing for longs
| but not shorts?
|
| Some non-nefarious explanations I can think off the top
| of my head:
|
| * hedge funds and their prime brokers has much easier
| access to credit than retail brokerages, which allow them
| fulfill their deposit obligations than a discount
| brokerage
|
| * since the hedge funds shorted GME a long time ago, the
| trades were already settled, so they're not subject to
| any deposit obligations (since deposit obligations only
| exist for unsettled trades)
| nrmitchi wrote:
| > which allow them fulfill their deposit obligations than
| a discount brokerage
|
| Not even just easier access to new capital, but you can
| be sure they are able to move money faster than someone
| doing an ACH transaction to Robinhood that would take
| multiple days to actually settle.
| nrmitchi wrote:
| > no reason why margin requirements would increase for
| buyers of a stock but not for the shorts
|
| There are tons of reasons why (counter-party risk,
| correlated risk of brokerages with high exposure, T+2
| settlement, etc). You seem particularly keen on ignoring
| them though.
|
| > Robinhood may have simply been coerced to do this, but
| regardless
|
| Please stop ignoring known facts in favor of your
| conspiracy theory.
|
| > I and many other retail investors switched to bigger
| firms that won't have liquidity issues
|
| It is completely logical that larger brokerages will be
| able to weather liquidity issues more easily. If this was
| super important to you, going with the discount brokerage
| was a poor decision in the first place.
| MangoCoffee wrote:
| Robinhood probably gonna be a meme stock on /r/wallstreetbets
| when it ipo
| atlgator wrote:
| WSB wants revenge by shorting it. They really got burned in the
| whole GME/AMC fiasco when RH halted trading.
| meepmorp wrote:
| This is in addition to $65 in October, for misleading customers:
|
| https://www.reuters.com/business/finance/robinhood-pay-65-ml...
| hogFeast wrote:
| That hiring process, all that LeetCode, and they still couldn't
| work how to create a system that worked. Tragic.
| oxymoran wrote:
| "...and exposed them to excessively risky trading tools such as
| options"
|
| Oh FFS. That was actually one of positive things that Robinhood
| did. They could have had some better safeguards for the unlimited
| loss scenarios to be sure but to lament access to all options is
| disingenuous at best.
| wcchandler wrote:
| Agreed. I signed up for Robinhood and Webull after Fidelity
| denied me level 2 access, twice.
| sitzkrieg wrote:
| how many people do you know that signed up at RH to write
| covered calls? lol
|
| buncha clueless reddit people yoloing
| chunky1994 wrote:
| Note: This is not related to any activity relating to the
| gamestop/meme stock trading restrictions earlier this year, and
| was predominantly for their violations regarding proper trading
| controls and communications during 2018 to late 2020. This is a
| rather substantial fine in terms of those violations.
| FridayoLeary wrote:
| I wonder if the gamestock saga isn't the reason this news has
| received the attention it did.
| rychco wrote:
| That's it?
| jb775 wrote:
| The SEC is useless.
|
| $70M is 0.625% of the conservative value of Robinhood[1] as of a
| year ago. That means they have over 99.375% of value remaining to
| work with. How is this not simply treated as "cost of doing
| business" in the finance world? They should be putting execs in
| prison when the law is blatantly broken.
|
| Then they expect younger generations to blindly trust the finance
| system. Time is ripe for millennials to cash in their 401ks and
| find a new place to put it....where sticky hands can't touch it.
|
| [1] https://edition.cnn.com/2020/08/17/investing/robinhood-
| tradi...
| chunky1994 wrote:
| Firstly, this fine was issued by FINRA, not the SEC. Secondly,
| which laws did they break exactly?
|
| This is a substantial fine for the scope of violations that
| were being investigated, as this has nothing to do with any of
| the gamestop restrictions earlier this year but their
| messaging, outages and vetting of customer expertise during
| 2018-2020.
|
| It boils down to a $70M fine for not having a high avilability
| system, being bad at explaining trading concepts and allowing
| people to take risks that other banks would not. That's quite a
| reasonable amount.
| themodelplumber wrote:
| Prison? Really? A lot of otherwise disadvantaged people have
| made life-changing money with RH. It offers education, research
| tools, and generally does a good job of being useful in
| supporting a proactive investing and trading habit.
|
| I would guess that the real cost here is the publicity and
| reputation hit, not the fine.
| therealdrag0 wrote:
| Placing orders is not rocket science. I bought my first stock
| on etrade decades ago as a teenager from a lower class
| family. RH didn't add much except a pretty UI and lubrication
| to make it more gamboling than it already was.
| themodelplumber wrote:
| E-Trade, you mean the company that depicted a baby earning
| a stack of cash in a Superbowl ad?
|
| Good anecdote and I'm glad you were able to figure out how
| to buy your first stock, but even the gambling community
| cried foul on E-Trade when it was brand new.
|
| Robinhood's mobile app is known for its simple UI and
| improved charts over ET; it's much less cluttered in
| addition to being a good deal for taxable accounts +
| offering crypto derivatives.
| cryptica wrote:
| It's so arbitrary. Now I know what it felt like to live during
| the dark ages.
|
| We have:
|
| - Presidents and CEOs instead of kings and queens.
|
| - Corporate shareholders instead of knights.
|
| - Scientists, economists, lobbyists and regulators instead of
| priests.
|
| - Employees instead of peasants.
|
| Massive hypocrisy all around.
|
| The difference now is that many peasants can see everything and
| understand everything that's going on even better than the king
| can.
| FridayoLeary wrote:
| There always has to be a ruling class according to Orwell. But
| that isn't a bad thing necessarily, and i'm sure that any
| peasant from any period would happily sell his left arm to
| enjoy the privileges we all enjoy.
|
| >Now I know what it felt like to live during the dark ages.
|
| really?
|
| >Massive hypocrisy all around.
|
| Hmm. (i'm not attacking you personally, i'm also a terrible
| hypocrite, but trying to put things into perspective)
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