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SIPC Says It Has Serious Concerns About Robinhood's New Product

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Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#271

Post by gcbw2 »

maratd wrote: post #166
devman0 wrote: post #40

Earlier quoted context omitted.

I'm not sure how Ameritrade works, but the other brokers I've used (Fidelity, Schwab, and Vanguard) you either have an 'uninvested' position where your cash is parked (generally a federal money market fund) or bank sweep that is FDIC insured. They never actually hold cash for you it is either in a money market or a bank sweep.

It's highly likely that Robinhood will do the same. It'll be parked in a money market, with the option of writing checks, etc. all of which you can do already with the other brokerages. The new thing here I think is the ATM card and them covering the difference between the money market rate and 3%, which right now is less than 1%. They'll probably make up that difference via interchange fees when you use the debit ca…

Then why are those organizations saying they won't be insured?

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#272

Post by gcbw2 »

warp_factor wrote: post #161
aakilfernandes wrote: post #96

Earlier quoted context omitted.

What other reason would you have an Ameritrade account?

Zero fees on their international debit card (one of the best )

almost every bank has that. mine even reimburse the ATM fee.

(ok, unless you count the US crap list such as BoA, etc)

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#273

Post by alehul »

smileysteve wrote: post #220
alehul wrote: post #82

Earlier quoted context omitted.

Receiving agent status to purchase and sell securities on behalf of the consumer would mean the consumer is consenting to possible losses from the performance of those securities.

As is the case with any money market account...

Yes, point being that's not really the bank account Robinhood is trying to offer.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#274

Post by darkerside »

rootusrootus wrote: post #268
jfim wrote: post #23

Earlier quoted context omitted.

Probably because someone took "ask for forgiveness, not permission" a bit too far.

Or the president of SIPC is not speaking authoritatively for the organization and doesn't realize the RH lawyers have already been talking with SIPC about this. Of course, maybe that didn't happen, but between the idea that RH would build and announce a new product without running past the proper regulatory authorities, and the idea that the president of SIPC might just be wrong ... well, the latter seems more plausi…

You really think the president and CEO of the SIPC is a... freaking clown?? Sorry if that tone is harsh, but that statement appears completely ludicrous on its face to me. Can you provide a little context on why you would trust startup lawyers over the chief executive of a major government organization?

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#275

Post by mbesto »

dragonwriter wrote: post #217
harryh wrote: post #24

Earlier quoted context omitted.

It hasn't launched. Their website says "Robinhood Checking & Savings is launching early 2019."

But they are accepting signups for the waitlist (which require signing up for RH) and moving positions on the wait list based on referring other people to RH. Which may be the whole point of the offering.

Ding ding.

Even if they don't actually achieve the 3% APR checking accounts available ("sorry, it's actually 2% like the rest"), they still got people to sign up and they won't not register because they'll convince themselves "oh I got a debit card, and brokerage account, etc etc...who cares this is still great")

#growthhacking

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#276

Post by dragonwriter »

harryh wrote: post #230
dragonwriter wrote: post #217

Earlier quoted context omitted.

But they are accepting signups for the waitlist (which require signing up for RH) and moving positions on the wait list based on referring other people to RH. Which may be the whole point of the offering.

Ya, could be. Though hanlon's razor makes me think this was more them not thinking things all the way through than a devious plan to get a bunch of signups without ever launching anything.

I mean that the major point of offering the checking and savings feature was to get people to sign up (both directly and by referral) for RH and make it easier for them to market trading services—and that it was serving that feature without being launched—not to argue that they planned never to actually launch the feature.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#277

Post by dontparticipate »

pbreit wrote: post #245
DevX101 wrote: post #11

> “I disagree with the statement that these funds are protected by SIPC,” Stephen Harbeck, president and chief executive officer of SIPC How the hell did this product get launched?

First, it hasn't. Second, the SIPC boss probably is not in the best position to understand how RH is setting it up. Harbeck seemed unaware that the "cash" in RH accounts was actually going to reside in investments like Treasuries and thus be covered.

So what happens when the value of those treasuries fluctuates? Does the value of these "checking accounts" fall according to changes in the underlying asset? They aren't really cash accounts then. Treasures may be the safest investments, but are not perfectly safe and value still fluctuates based on changes in interest rates. That's a pretty key part of if they should be treated like a retail checking account or a money market account. Also, do these account provide some kind of certainty that they only invest in treasuries? What happens when "Robinhood Home Loans, get yours in 60 seconds or less!" opens up a year from now?

These accounts remind me a lot of the accounts offered by Washington Mutual right before there was no longer a Washington Mutual. Except back then, their bold rate offering was only something like 1.5%. A lot of young dumb people are going to lose their shirts on this one.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#278

Post by nodesocket »

Apocryphon wrote: post #97

Let's talk about conventional alternatives to this. I've heard good things about Ally bank's 2% saving account. Does anyone here use anything comparable? How about credit unions?

Capital One 360 money market offers 2% (balances over $10,000) and is FDIC insured. They are offering the following promos as well which make them the best offer in my opinion.

  $1,000 bonus on $150,000 deposit or more
  $200 bonus on $10,000 - $149,999 deposit
See https://www.capitalone.com/value2018/. You have to use the promo code VALUE2018 and read the fine print.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#279

Post by ucaetano »

pitaj wrote: post #267
jkravitz61 wrote: post #215

Earlier quoted context omitted.

They are still claiming it is SIPC insured- which is false, regardless of what you call it.

It's not necessarily false - that's up for various attorneys to decide.

Technically true, but irrelevant. Everything might be up for attorneys and judges to decide.

Re: SIPC Says It Has Serious Concerns About Robinhood's New Product

#280

Post by mynameisvlad »

darkerside wrote: post #274
rootusrootus wrote: post #268

Earlier quoted context omitted.

Or the president of SIPC is not speaking authoritatively for the organization and doesn't realize the RH lawyers have already been talking with SIPC about this. Of course, maybe that didn't happen, but between the idea that RH would build and announce a new product without running past the proper regulatory authorities, and the idea that the president of SIPC might just be wrong ... well, the latter seems more plausi…

You really think the president and CEO of the SIPC is a... freaking clown?? Sorry if that tone is harsh, but that statement appears completely ludicrous on its face to me. Can you provide a little context on why you would trust startup lawyers over the chief executive of a major government organization?

Nobody said a "freaking clown" or anywhere near that. The higher up you are at a company or organization, the less visibility you have into the day to day operations. What OP is saying is simply that the CEO of SIPC may not be informed in the discussions that already happened with Robinhood.

Simply put, Robinhood has far more at risk than the SIPC by launching without SIPC insurance. The banking industry is heavily regulated and Robinhood has been in the brokerage game for enough now to know that a major product launch like this in a tightly regulated area requires massive amounts of paperwork and approval. A mistake like this could collapse not only this new product but also their brokerage. It's far more likely that they have done their due diligence before announcing and launching a product that has that big of a risk.

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