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Robinhood, in Need of Cash, Raises $1B from Its Investors

nytimes.com

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Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#121

Post by michaelscott »

Clewza313 wrote: post #67
bredren wrote: post #36

Earlier quoted context omitted.

I had a neutral to negative view toward this product before today. In part due to the product’s UX having to change after a customer killed themselves and cited the app in their suicide note. [1] I noticed that before but bad stuff happens, I had not heard of further issues and it was likely a series of contributing factors. That said, this bind broke the entire concept of the branding of the product. I’d never insta…

They've lost the trust of people YOLOing on meme stonks. I'm sure it's a noisy part of their userbase, but still only a part. It would be interesting to see stats on how many people use RH for long-term investments (buy and hold, DCA, etc), and how many use it as a form of gambling (day trading, leveraged options etc).

I'm not sure about this. If there's clear and blatant market manipulation on the part of the broker (which will likely get them hauled in before the SEC btw) then I imagine many investors/traders looking at this from the sidelines will be pulling their accounts as well, whether they're involved in this directly or not.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#122

Post by astrange »

skybrian wrote: post #59
dmichulke wrote: post #43

Not sure I understand: High volume causes sudden operating expenses up to a billion? Like, they're launching more EC2 instances? Or is that because they suffer from slippage? And if so, why don't they adjust the spreads? And if it's slippage, why would they still allow selling but not buying? Color me skeptic, but this makes no sense. For now I believe they just come up with some story to mask their obvious, IMO crim…

As I understand it, stock trades take days to settle and the brokerage is on the hook if the customer doesn't pay for some reason. When the market is so volatile, Robinhood's trading partners demand more collateral.

It’s NSCC who demands it, the central clearinghouse for all these trades.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#123

Post by cma »

dagw wrote: post #108
blueblisters wrote: post #77

Earlier quoted context omitted.

Are brokerage deposits / holdings protected by insurance? I'm genuinely fearful of losing my holdings in Robinhood at this point.

Yes, it's called SIPC and is (kind of) equivalent to the FDIC for banks. However it only covers up to $500k, only covers cash, stocks, bonds, CDs, and (I think) mutual funds. It does not cover options or future contracts. Also it will only attempt to return the securities you 'lost' not their cash value. If you lose a lot of money due to not being able to sell your stocks for several days, that is not covered. So if…

It covers less than $500K if SIPC itself fails (after $5 billion in payouts it is insolvent).

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#124

Post by neximo64 »

peytn wrote: post #37
ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.

Your bank actually has to lie to you to remain solvent. All banks do. The Central Bank also encourage it.

Last year you saw both that banks were 'forced' to withhold dividends and they were perfectly capitalised. Both cant be true of course.

If they hide it from you your money and everyones money is safe. If they tell the truth everyone loses, so it is actually the best outcome for you and everyone else. The fractional reserve system relies on not everyone withdrawing their money at once.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#125

Post by ricardobayes »

sverhagen wrote: post #55

Is it just me, or did that article end... weird? Like, scrolling more, expecting it to continue. I'm sure we've been conditioned to such articles having a typical arc, that this one... didn't?

Well the story is still developing.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#126

Post by astrange »

vmception wrote: post #80
ivalm wrote: post #73

Earlier quoted context omitted.

Sure, but as far as frauds go it is fairly victimless. Their users were likely winners in the aggregate for using RH

Moving back to my actual point, the SEC and DOJ should leverage this prior settlement to enforce stricter sanctions. The mere existence of the prior action makes them cannon fodder. Hit them.

Sanction them for what? What they did today was caused by following the rules. They couldn’t do anything else.

If they did restricted selling it would be “fair” but it would be illegal because only regulators can halt sales.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#127

Post by Clewza313 »

AmericanChopper wrote: post #116
Clewza313 wrote: post #67

Earlier quoted context omitted.

They've lost the trust of people YOLOing on meme stonks. I'm sure it's a noisy part of their userbase, but still only a part. It would be interesting to see stats on how many people use RH for long-term investments (buy and hold, DCA, etc), and how many use it as a form of gambling (day trading, leveraged options etc).

> people YOLOing on meme stonks This is all that day trading is. Regardless of whether the traders even know what a meme subreddit is. Why would any day trader want to use a platform that’s going to do stuff like cut you out of an epic short squeeze? If a non-professional investor had sensible ideas, they wouldn’t be day trading.

There's day trading, and then there's taking out credit card cash advances to buy leveraged call options on a stock that's already gone up 1000% in a month. Both are risky, but the day traders I've known wouldn't touch the latter with a barge pole.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#129

Post by uncledave »

onion2k wrote: post #96
peytn wrote: post #37

Earlier quoted context omitted.

I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.

I’m not keeping my money with a financial institution that lies to me. I know for a fact my bank lies. They've been fined hundreds of millions of dollars for money laundering (it's HSBC). A few years ago I looked in to moving to a more honest bank, but I couldn't find one that also met basic criteria like having access to cash points in the UK and having a half decent mobile banking app. Literally every major bank th…

Santander is 100% less shit than HSBC. That’s my only input. I’m sure someone is better but their front end services are mostly fit for purpose.

Really diversifying your funds across multiple banks is a wise move. I’ve got Halifax, NatWest, Santander and HSBC accounts still.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#130

Post by collyw »

onion2k wrote: post #96
peytn wrote: post #37

Earlier quoted context omitted.

I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.

I’m not keeping my money with a financial institution that lies to me. I know for a fact my bank lies. They've been fined hundreds of millions of dollars for money laundering (it's HSBC). A few years ago I looked in to moving to a more honest bank, but I couldn't find one that also met basic criteria like having access to cash points in the UK and having a half decent mobile banking app. Literally every major bank th…

Monzo appear to be more interested in showing of their hipster tech stack than anything else.
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