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

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

#71

Post by whimsicalism »

seibelj wrote: post #60
whimsicalism wrote: post #42

Earlier quoted context omitted.

The SEC has regulatory capture issues. Way too close of ties with the people it is supposed to be regulating. Take the example of this SEC investigator [0] whose boss got a call from one of those Wall Street hedge funds under investigation and suddenly he's fired! Mysteriously, that boss gets a job with the same firm a few months later. Oh, the kicker? The person who made that call from the hedge fund? Appointed to b…

This is par for the course in most government agencies that regulate private business. The SEC gets tons of press and scrutiny (and it happens anyway!) but there are innumerable government agencies with similar issues. You can also downvote me, but anyone who has worked deeply with the government from the private sector is full of WTF stories.

It is common, but I would not go so far as to say "par for the course". Nor does the SEC get "tons of press and scrutiny" - indeed, you can see all of the positive op-eds written in places like the NYT and WaPo about Mary Jo White's appointment (with a few notable dissenters in Salon like Matt Taibi).

In the EPA, for instance, this was Obama's appointee: https://en.wikipedia.org/wiki/Gina_McCarthy. No significant industry ties. Here's another one of Obama's picks for FDA: https://en.wikipedia.org/wiki/Margaret_Hamburg . Again, no significant industry ties.

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

#72

Post by NovemberWhiskey »

travisoneill1 wrote: post #36
jgalt212 wrote: post #26

Earlier quoted context omitted.

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.

I mean laws that existed at the time AirBnB was started, which you seem to imply in your comment. I still think it's strange that the government can tell you how long of a duration you have to rent your property for, but it definitely is the law now.

New York's Multiple Dwelling Law is probably a canonical example.

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

#73

Post by whimsicalism »

eru wrote: post #70
whimsicalism wrote: post #52

Earlier quoted context omitted.

Very chill and very non-plutocratic.

Nobody forced you to sign up with them.

I haven't. But there are obvious power dynamics when large market actors can get people to waive their right to sue. There's a reason they're called "inalienable." They're not supposed to be self-alienable either.

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

#74

Post by d33lio »

argonaut wrote: post #66
d33lio wrote: post #56

They deserve every single bit of this. Please use a real reputable broker / platform like Schwab. Sure, they don't have a mobile app - but they also don't sell your trading info to front-runners, actively manipulate the charts they show you to influence your decisions and let their platform crash and just tell you "thats how things go". edit - I didn't realize Youtuber RH fanboys read hacker news...

Schwab also receives payment for order flow (AKA selling your orders): https://www.schwab.com/legal/order-routing-1 . In fact, every retail brokerage I'm aware of receives payment for order flow. Schwab also has outages although not as bad as Robinhood was this year.

Sure, but they don't promote buying crypto as an "investment". Tbh, I don't really have the patience to argue over this.

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

#75

Post by eru »

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.

Are you sure the current FDA is worth your trust? Or are you being cynical?

The pre-1962 FDA had perhaps the better regulatory framework: back then new drugs had to show safety, now they have to show safety and efficacy.

Off-label prescription show that efficacy requirements are not necessary in practice, and just needlessly delay drugs and make their development more expensive.

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

#76

Post by EvanKelly »

eru wrote: post #67
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?

What's perhaps a bit weirder is that the SEC is allowed to settle, instead of having to go through the judicial system.

Why is that weird? Attorneys in this are working on behalf of the US Government. If they feel like settling gets the best deal for the government, then they do that.

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

#77

Post by SpicyLemonZest »

deegles wrote: post #63

What is the purpose of such small fines? Their valuation has gone from 1.3B in 2017 to 10.2B in August 2020 [0]. Only having to pay a $65m fine for that amount of growth sounds like a great deal. /s Obviously it's more relative to their revenues but it still seems like peanuts. [0] https://www.businessofapps.com/data/robinhood-statistics/

The purpose of such small fines is to serve as a proportional deterrent to the misconduct they committed. The charge is that Robinhood falsely claimed their prices were lower than the competition; they shouldn't have lied, but that's hardly the crime of the century.

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

#78

Post by eru »

andris9 wrote: post #68
deegles wrote: post #63

What is the purpose of such small fines? Their valuation has gone from 1.3B in 2017 to 10.2B in August 2020 [0]. Only having to pay a $65m fine for that amount of growth sounds like a great deal. /s Obviously it's more relative to their revenues but it still seems like peanuts. [0] https://www.businessofapps.com/data/robinhood-statistics/

I assume they can't pay the fine with their stock

Indirectly, they can: issue some more stock, and pay the fine with the cash earned.

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

#80

Post by irl_zebra »

seibelj wrote: post #60
whimsicalism wrote: post #42

Earlier quoted context omitted.

The SEC has regulatory capture issues. Way too close of ties with the people it is supposed to be regulating. Take the example of this SEC investigator [0] whose boss got a call from one of those Wall Street hedge funds under investigation and suddenly he's fired! Mysteriously, that boss gets a job with the same firm a few months later. Oh, the kicker? The person who made that call from the hedge fund? Appointed to b…

This is par for the course in most government agencies that regulate private business. The SEC gets tons of press and scrutiny (and it happens anyway!) but there are innumerable government agencies with similar issues. You can also downvote me, but anyone who has worked deeply with the government from the private sector is full of WTF stories.

I did downvote you because you said I could, but this is absolutely true. But, it kind of should be true. Government employees need to strongly know the industry they’re regulating to regulate effectively. I can’t imagine someone with zero financial ties and only knowledge from school going to direct how the SEC does investigations any more than I can imagine the same happening at the FDA.

I don’t think there should be so much regulatory capture (there is), but I do think a revolving door of sorts for many positions is helpful from a perspective of knowing the regulated industry and acting with the best knowledge of regulating that industry.

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