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

Post by whimsicalism » Thu, Dec 17, 2020, 4:54 PM UTC

dnautics wrote: post #156

whimsicalism wrote: post #135

Earlier quoted context omitted.

They're not really teethed though. I grew up in DC and new plenty of parents who were ex-chief of staffs or whatever and they literally would tell me that they were working for a lobbying firm as a "consultant" because that was a loophole for getting around the "can't join a lobbying firm rules."

Nah, you just shut out good people who want to do good things but can't figure out rules or feel like the burden to doing good things or the potential penalty on technicality or slipup isn't worth it, and select for sociopaths who are adept at figuring out how to use rules (especially draconian ones) to their own advantage, spirit of the rule notwithstanding, because they WILL put up with the burden and the risk.

Post by jellicle » Thu, Dec 17, 2020, 4:56 PM UTC

sonotmyname wrote: post #167

miguelmota wrote: post #159

As long as profits are greater than fines, these penalties aren't enough to incentivize good behavior.

> The order finds that Robinhood provided inferior trade prices that in aggregate deprived customers of $34.1 million even after taking into account the savings from not paying a commission. Sooooooo the fine is nearly 2x the cost to consumers due to malfeasance. That should cover your concern here.

Post by jellicle » Thu, Dec 17, 2020, 4:58 PM UTC

ehejsbbejsk wrote: post #81

cj wrote: post #59

Earlier quoted context omitted.

Sometimes what's good for the 1 person isn't good for everyone. For example, if a bank starts giving out 0% interest 100 year mortgages (with some fine print that gives them some obscure revenue source to make it possible for them to make such an appealing offer) the bank should still get in trouble in my opinion if the consumer isn't informed about how they're getting such an amazing deal, because you're removing th…

I know what you want to say but that’s an awfully bad example. I would take out that loan 10 times over.

Post by baby » Thu, Dec 17, 2020, 5:02 PM UTC

aabhay wrote: post #165

notional wrote: post #162

> As the SEC’s order finds, one of Robinhood’s selling points to customers was that trading was “commission free,” but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices. Despite this, according to the SEC’s order, Robinhood falsely claimed in a website FAQ between October 2018 and June 2019 that its exe…

This is a very tame reading of the mistake. Telling customers that their stock orders would be executed at prices matching other firms, when in fact Robinhood was executing those orders at inferior prices -- that's a big misrepresentation. You're paying extra for something while being told that you're not.

Post by dnautics » Thu, Dec 17, 2020, 5:06 PM UTC

whimsicalism wrote: post #171

dnautics wrote: post #156

Earlier quoted context omitted.

Nah, you just shut out good people who want to do good things but can't figure out rules or feel like the burden to doing good things or the potential penalty on technicality or slipup isn't worth it, and select for sociopaths who are adept at figuring out how to use rules (especially draconian ones) to their own advantage, spirit of the rule notwithstanding, because they WILL put up with the burden and the risk.

> you just shut out good people who want to do good things but can't figure out rules It's not really that complicated to not work for a lobbying firm for 2 years after leaving a chief of staff position for a Senator. Nor do I particularly want people too dull to figure out those rules to be making laws for our entire country?