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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

#91

Post by ehejsbbejsk »

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...

I hate to break this to you but front running happens all the time in finance. In fact that’s the entire business model for bulge bracket trading desks. I know it’s easy to point fingers at RH but what they’re doing is very benign.

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

#92

Post by ehejsbbejsk »

eru wrote: post #86
ehejsbbejsk wrote: post #55

I believe this is to punish RH for offering zero commissions. Especially on options. I seriously think what RH offers, for anyone who’s traded options on the retail side, is a game changer.

Alas, for most people, especially retail and even more especially options, it's better if they trade less.

Govt cannot be an arbiter of what people do with their money. Period.

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

#93

Post by jamesmehaffey »

It is a shame that these types of tech companies are always churning up such bad publicity... they literally cannot afford to be making these sorts of unforced errors. It just makes it that much more difficult for all the innovative and honest startups who are trying to bring about positive disruption. cutting corners and misleading your customers is not innovation.

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

#94

Post by eru »

ehejsbbejsk wrote: post #92
eru wrote: post #86

Earlier quoted context omitted.

Alas, for most people, especially retail and even more especially options, it's better if they trade less.

Govt cannot be an arbiter of what people do with their money. Period.

I have sympathy for that sentiment, but in practice that train has long left the station.

My own comment wasn't a plea for government to interfere, btw. Just a cynical admission that active trading is bad for the vast majority of people.

(My own money is sitting in the most boring ETF I could find, but loaded with about 3x leverage. Given the regulatory requirements of the industry I work in, I wouldn't be allowed to trade actively anyway, but I don't feel like I'm missing out.)

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

#95

Post by bagacrap »

_cs2017_ wrote: post #88

ELI5: why exactly did the clients get bad execution? Does sending order flow to trading firms in itself cause unfavorable execution? Or did the trading firms treat order flow from RH differently than from other sources? Or is it something else? And does the fact that RH was receiving large payments for order flow impact the quality of execution?

Payment for order flow trade never helps the consumer. RH accepted unusually large amounts of it. They harmed the consumers to the tune of $34m relative to normal practices. They lied about what they were doing.

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

#96

Post by nraynaud »

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.

I know I France short term vacation rentals is way older than airBnB, we have an entire infrastructure, vocabulary and legal framework around it.

Americans are always baffled when they come here and start getting away from AirBnB.

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

#97

Post by gypsy_boots »

_cs2017_ wrote: post #88

ELI5: why exactly did the clients get bad execution? Does sending order flow to trading firms in itself cause unfavorable execution? Or did the trading firms treat order flow from RH differently than from other sources? Or is it something else? And does the fact that RH was receiving large payments for order flow impact the quality of execution?

> Or did the trading firms treat order flow from RH differently than from other sources?

I'm not well versed in financial language by any stretch, but i believe it's this.

Matt Taibbi did a piece on them last week and goes into this. https://taibbi.substack.com/p/pandemic-villains-robinhood

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

#98

Post by _jal »

jamesmehaffey wrote: post #93

It is a shame that these types of tech companies are always churning up such bad publicity... they literally cannot afford to be making these sorts of unforced errors. It just makes it that much more difficult for all the innovative and honest startups who are trying to bring about positive disruption. cutting corners and misleading your customers is not innovation.

It isn't just finance startups. With one exception, every startup I've worked for has done something I considered at least sketchy. The difference is most of them didn't have a federal agency with teeth paying attention.

It is, honestly, something I struggle with a bit. I don't like it, but it seems like the state of play is that "a little bit" of cheating is expected, and those who don't are at least operating at a handicap. Exactly how wide that gray area is depends on who is advising you, and sometimes results in shops like early-Uber.

One of my least-favorite aspects of SV.

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

#100

Post by quickthrowman »

jamesmehaffey wrote: post #93

It is a shame that these types of tech companies are always churning up such bad publicity... they literally cannot afford to be making these sorts of unforced errors. It just makes it that much more difficult for all the innovative and honest startups who are trying to bring about positive disruption. cutting corners and misleading your customers is not innovation.

How is a discount brokerage a tech company? They’re .. a brokerage, just like Schwab or E*Trade.
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