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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

#141

Post by LanceH »

_jal wrote: post #104
whimsicalism wrote: post #73

Earlier quoted context omitted.

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.

One of many good reasons to worry about the composition of the SCOTUS - important cases effecting this very right are headed there, and this is the most "business-friendly" (as the euphemism goes) court in quite some time. Too bad it is probably too late on these issues; we're approaching a situation where an increasing amount of "little people" law will be handled in arbitration. Justice in the US has always provide…

I don't think you'll get anything more business friendly than "Kelo v. City of New London" and that was driven by the left.

This is far more minor by comparison and protects the rights of people to enter into contracts, even those they don't like.

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

#142

Post by malux85 »

brookshalladay wrote: post #64

I always wondered about the name 'Robinhood' since it applies taking from the rich and giving to the poor. Maybe it could be renamed to Sheriff of Nottingham.

It’s a trap.

It implies it, but doesn’t guarantee it. Everyone wants to be that hero in the narrative, and by the time the people figure out they have been shirked (but not directly lied to) your company has been acquired and you’re out with bags of money.

Clever, unethical and legal (by the thinnest margin)

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

#143

Post by LanceH »

whimsicalism wrote: post #131
simias wrote: post #84

Earlier quoted context omitted.

Correcting people when they use wrong pronouns is distracting but I get it, but can we at least not correct people for not using the right variety of neutral pronouns?

Not to really get into this debate, but I will note that "they" is more neutral than s/he.

But not necessarily correct, right? And what is correct? It's apparently whatever the addressee chooses these days, so good luck.

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

#144

Post by Kranar »

bagacrap wrote: post #95
_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.

This is incorrect. The benefit of order flow to the consumer is additional sources of liquidity. If a consumer submits an order to buy 500 shares of AAPL for $100, there may only be 100 shares available on the public market at that price in which case the price of AAPL will increase from $100 to at a minimum $100.01.

The way pay for flow works is that firms can execute against that order agreeing to fill any portion of it up to and including the full 500 shares.

Furthermore by agreeing to pay for flow, it's a criminal offense for my firm to use that information to front run the order by buying it on the open market without first executing against the client. The allegation made by the SEC against Robinhood is that some kind of indirect front running was performed and perhaps even facilitated by Robinhood.

The problem is that the SEC is pretty weak overall, and if their allegation is true then Robinhood should be punished much more severely than this $65M fine given that Robinhood and others likely profited at a minimum some $40M dollars.

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

#146

Post by Kranar »

treis wrote: post #140
himoacs wrote: post #102

Earlier quoted context omitted.

Basically, if you want to buy AAPL at $100 and as your broker, I take that info and share it with someone else, such as an HFT, they will quickly (milliseconds/nanoseconds) buy AAPL and sell you at a higher price. So, while you expected to pay $100, you ended up paying $100.10. Now that doesn't seem a lot to you but times the difference (10 cents) by volume and number of Robinhood customers placing orders and it can…

This is front running and illegal.

Yes, exactly. That's what this submission and charge by the SEC is all about.

Is everyone just forgetting the entire purpose of this submission is that Robinhood used pay for order flow to facilitate front running?

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

#147

Post by mindslight »

eru wrote: post #87
whimsicalism wrote: post #73

Earlier quoted context omitted.

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.

I don't think the right to sue is inalienable.

Without the ability to sue for a breach, there is no reason to have a contract in the first place. The terms might as well say "each party can do whatever they want at any time."

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

#148

Post by treis »

Kranar wrote: post #146
treis wrote: post #140

Earlier quoted context omitted.

This is front running and illegal.

Yes, exactly. That's what this submission and charge by the SEC is all about. Is everyone just forgetting the entire purpose of this submission is that Robinhood used pay for order flow to facilitate front running?

All the press release says is:

>Robinhood failed to seek to obtain the best reasonably available terms when executing customers’

That could mean pretty much anything.

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

#149

Post by Bayart »

_jal wrote: post #98
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…

Bryan Cantrill has a talk on YT on ethics in software [1]. And as I remember it the take away is that the way we think about problems isn't very conducive to obeying the law, or being good to people in general. And I've got to say the amount of people I see thinking of regulations, social norms or morals as « cruft » is pretty alarming.

[1] https://www.youtube.com/watch?v=0wtvQZijPzg

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

#150

Post by Bayart »

quickthrowman wrote: post #100
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.

The tech's in the app and the marketing. Bring debilitating gambling to a larger audience type of thing.
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