Robinhood Will Retool Checking Product Following Scrutiny

Post by AnthonyMouse » Sun, Dec 16, 2018, 7:02 AM UTC

JumpCrisscross wrote: post #47

AnthonyMouse wrote: post #46

Earlier quoted context omitted.

I don't know. The fact that it was done completely publicly (and therefore was discoverable and discovered immediately) basically moots any need for harsh penalties. They were essentially testing the fences. That isn't bad , especially when it's done completely in the open. It gives the regulators an opportunity to say "no" and shut it down immediately if they want to, or say nothing and let it proceed. If they say n…

> the alternative is that nobody is willing to try anything new just because there is no existing precedent explicitly saying that it's OK The part that was grossly problematic was Robinhood falsely claiming it was SIPC-insured. SIPC insurance isn’t automatically granted. There isn’t any useful innovation limited by telling people “try new things, but don’t lie about having certifions you don’t have.”

Post by eropple » Sun, Dec 16, 2018, 7:06 AM UTC

AnthonyMouse wrote: post #51

JumpCrisscross wrote: post #47

Earlier quoted context omitted.

> the alternative is that nobody is willing to try anything new just because there is no existing precedent explicitly saying that it's OK The part that was grossly problematic was Robinhood falsely claiming it was SIPC-insured. SIPC insurance isn’t automatically granted. There isn’t any useful innovation limited by telling people “try new things, but don’t lie about having certifions you don’t have.”

A plausible explanation is that they expected it to apply. "Try new things, but never make a mistake" is essentially equivalent to "never try new things."

Post by roywiggins » Sun, Dec 16, 2018, 7:13 AM UTC

astura wrote: post #52

latch wrote: post #42

Earlier quoted context omitted.

Maybe it's because I don't understand how deposit insurance works. Maybe it's because I live in a country where there are relatively few banks. But is this insurance actually meaningful? For example, if RBC "failed" in Canada, woulnd't the payout largely come from the Bank of Canada printing more money and all this could essentially happen without CIDC existing? You might get your money back, but now a loaf of bread…

"Insurance" is the key word here, "insurance" and "promise of a no questions asked unlimited government handout" is not the same thing. Just like auto insurance, everyone pays premiums to the FDIC which pools the money and claims are paid for using that pool.

Post by foobarbazetc » Sun, Dec 16, 2018, 7:21 AM UTC

jamestimmins wrote: post #9

This seems to be a Rorschach Inkblot test for what people think of fin-tech/startups in general. If you want to see it as an example of a company moving too fast and being careless then you're inclined to jump on that reasoning. The same goes if you think this was a purposeful attempt to mislead the public. Either way, what actually happened isn't public, so it's foolish to jump to conclusions.

Post by whitepoplar » Sun, Dec 16, 2018, 7:25 AM UTC

astura wrote: post #48

whitepoplar wrote: post #11

Earlier quoted context omitted.

Not quite. Fidelity CMA accounts are brokerage accounts and thus cannot offer FDIC insurance because Fidelity is not a bank. Fidelity accounts offer SIPC insurance. However, Fidelity's trick is to sweep all cash into third-party FDIC-insured bank accounts behind the scenes. This yields several benefits: 1) Practically speaking, it offers the exact same FDIC insurance as a real bank account, because your money is bein…

It's sorta abstracted in a way, but they are very clear about what's happening behind the scenes; they even show you which banks hold your deposits, which banks are available to hold your deposits, and they even let you request to exclude some banks from holding your deposits. (I don't remember if it was a priority system or an include/exclude system) There's no hand waving going on.