SEC charges Robinhood $65M for misleading customers about revenue sources • Hacker News Board

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#21

Post by lwigo » Thu, Dec 17, 2020, 2:32 PM UTC

gamerDude wrote: post #6

If the SEC has gone through and has accounted for the 34 million in cost to consumers, why are they not having robinhood reimburse the customers for their lost money on the trades and then charging the additional 30 million on top for lying? Why does the SEC take all the money?

They don't actually care about the little people. It's more about keeping the company in check so it doesn't become a monopoly for retail thumb traders faster than the next closest competitors in that category can catch up (which would be Webull I guess?). It's also a reminder that, hey, there's a shitton of (old) money in this field, better not get cocky.

Possibly too cynical of a take, but I'll reiterate the SEC doesn't care about the people browsing WSB.

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#22

Post by gbronner » Thu, Dec 17, 2020, 2:33 PM UTC

This can and will be fixed by hiring the compliance department from another broker.

Etrade just merged with MS, and a lot of the etrade people are in in the SF Bay Area....

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#23

Post by jnmandal » Thu, Dec 17, 2020, 2:33 PM UTC

dimitrios1 wrote: post #18

jgalt212 wrote: post #12

This is probably why VC's have historically shied away from heavily regulated industries. It's just too easy for " insanely ambitious" founders to run afoul of the rules and laws. Fortunately for AirBnB, these rules and laws weren't enforced all that often.

This is inaccurate. Some of the most successful startups in recent memory made their bankroll by skirting regulations. It eventually catches up to them, but by then they've made a decent sized war chest to comply and plow forward. Eventually the startup just becomes the next established player. Rinse and repeat.

Yeah I mean, there is practically a cookie cutter framework for building successful startups based on industries with regulations that are protective or restrictive (depending on you look at it) enough to skew markets.

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#24

Post by phillnom » Thu, Dec 17, 2020, 2:34 PM UTC

plouffy wrote: post #9

danielfoster wrote: post #4

Earlier quoted context omitted.

So you place a lot of trust in the SEC or you don't?

He/She does.

I didn't downvote but wanted to suggest just using "they" when you don't know.

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#25

Post by VWWHFSfQ » Thu, Dec 17, 2020, 2:34 PM UTC

jnmandal wrote: post #17

gamerDude wrote: post #6

If the SEC has gone through and has accounted for the 34 million in cost to consumers, why are they not having robinhood reimburse the customers for their lost money on the trades and then charging the additional 30 million on top for lying? Why does the SEC take all the money?

The sad truth of this is that this is just three letter agencies doing as three letter agencies does. I don't think anyone at the SEC was looking after consumers here. If they were, they would similarly investigate other brokerages with the same practices (which is many).

The SEC doesn't have infinite resources to investigate every possible case like this. As with most prosecutions, they just go after the most obvious/high-profile/egregious cases that have the highest probability of success.

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#26

Post by jgalt212 » Thu, Dec 17, 2020, 2:35 PM UTC

travisoneill1 wrote: post #20

jgalt212 wrote: post #12

This is probably why VC's have historically shied away from heavily regulated industries. It's just too easy for " insanely ambitious" founders to run afoul of the rules and laws. Fortunately for AirBnB, these rules and laws weren't enforced all that often.

In AirBnB's case were there actually any preexisting rules? It would seem strange to have rules in place governing short term rentals before there was really even a market for that.

surely, you jest? A simple google search of AirBnB and illegal will more than satisfy your curiosity. And yes, a good portion of the laws broken are directly broken by the lessors, but many are also broken by AirBnB itself.

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#27

Post by Technically » Thu, Dec 17, 2020, 2:36 PM UTC

asdfasgasdgasdg wrote: post #19

gamerDude wrote: post #6

If the SEC has gone through and has accounted for the 34 million in cost to consumers, why are they not having robinhood reimburse the customers for their lost money on the trades and then charging the additional 30 million on top for lying? Why does the SEC take all the money?

I don't know the answer in this specific case, but often in the case of small rewards like this, it's because administering the return of the money would consume a large fraction of it.

Still, better than going to the SEC.

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#28

Post by befeltingu » Thu, Dec 17, 2020, 2:37 PM UTC

chairmanwow1 wrote: post #3

I know this may be a slap on the wrist for Robinhood, but honesty the SEC is one of the branches of government that I trust almost as much as the FDA. I appreciate the work they do and I hope they continue it.

Why do you trust the FDA?

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#29

Post by jgalt212 » Thu, Dec 17, 2020, 2:37 PM UTC

dimitrios1 wrote: post #18

jgalt212 wrote: post #12

This is probably why VC's have historically shied away from heavily regulated industries. It's just too easy for " insanely ambitious" founders to run afoul of the rules and laws. Fortunately for AirBnB, these rules and laws weren't enforced all that often.

This is inaccurate. Some of the most successful startups in recent memory made their bankroll by skirting regulations. It eventually catches up to them, but by then they've made a decent sized war chest to comply and plow forward. Eventually the startup just becomes the next established player. Rinse and repeat.

Please cite some examples from "heavily regulated industries".

Re: SEC charges Robinhood $65M for misleading customers about revenue sources

#30

Post by salawat » Thu, Dec 17, 2020, 2:37 PM UTC

jgalt212 wrote: post #12

This is probably why VC's have historically shied away from heavily regulated industries. It's just too easy for " insanely ambitious" founders to run afoul of the rules and laws. Fortunately for AirBnB, these rules and laws weren't enforced all that often.

There's not that much that keeps you as a startup from thriving in a regulation heavy environment. In fact, most regulators aren't there to kill you. They just want to know you have a plan that builds towards compliance over time.

There is admittedly a difference in the stakes and severity of enforcement in different verticals; but it's more than possible to comply. In fact, zealous compliance can actually get regulations rewritten and unmask systemic fraud/non-compliance in established actors if you do it right. Everyone should be meeting the same goals, but if you have one company struggling to honestly do so, it's a sign to look into tge mechanisms other actors have in place and whether they actually do what is on the tin. EPA learned that indirectly the hard way with Dieselgate.