Author Topic: Anyone else concerned with Robinhood's business practices?  (Read 654 times)

ctuser1

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Anyone else concerned with Robinhood's business practices?
« on: January 03, 2021, 08:05:38 AM »
https://www.sec.gov/news/press-release/2020-321

tl;dr: They seem to make most of their money by selling trade data i.e. to give "smart money" a sneak peek into what "dumb money" is trying to do. Then they mislead users about it.

https://www.nbcnews.com/tech/tech-news/confetti-push-notifications-stock-app-robinhood-nudges-investors-toward-risk-n1053071
tl;dr: Gamified user interface nudging users to take outsized risk, much of which they probably don't understand. Apt description in this article "Charles Schwab, meet Candy Crush". It pushes options, cryptos.

At some point of time, they will likely cause an entire generation of people to lose a lot of money that they can't afford to lose.


ender

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Re: Anyone else concerned with Robinhood business practices?
« Reply #1 on: January 03, 2021, 08:08:02 AM »
Honestly the problem with Robinhood is it is basically legal gambling and profiting off of that.

At some point of time, they will likely cause an entire generation of people to lose a lot of money that they can't afford to lose.

Robinhood is not much different imo as far as this goes as casinos are.

MustacheAndaHalf

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Re: Anyone else concerned with Robinhood's business practices?
« Reply #2 on: January 03, 2021, 10:05:47 AM »
I mean, if Robinhood investors can stick around a bit longer, I might need them if any of my holdings go bankrupt.  Their ignorant demand for bankrupt shares can result in a +50% to +100% bounce (depending on company size) off the post-bankruptcy crash.

I think the SEC fine speaks to Robinhood's (the company) misbehavior.  The fine is about the size of their entire 2018 revenues.  Maybe they'll feel a fiduciary responsibility after that?

jinga nation

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Re: Anyone else concerned with Robinhood's business practices?
« Reply #3 on: January 03, 2021, 10:11:52 AM »
I think the SEC fine speaks to Robinhood's (the company) misbehavior.  The fine is about the size of their entire 2018 revenues.  Maybe they'll feel a fiduciary responsibility after that?

Yeah, right!

Quote
Without admitting or denying the SECís findings, Robinhood agreed to a cease-and-desist order prohibiting it from violating the antifraud provisions of the Securities Act of 1933 and the recordkeeping provisions of the Securities Exchange Act of 1934, censuring it, and requiring it to pay a $65 million civil penalty.  Robinhood also agreed to retain an independent consultant to review its policies and procedures relating to customer communications, payment for order flow, and best execution of customer orders, and to ensure that Robinhood is effectively following those policies and procedures.

Slap on the wrist. Or maybe a light tickle (which may be taken as an "encouragement"). If the BigBanks can get away with a ton lot of worse, Robinhood will also continue to do what it does (under "supervision").

ChpBstrd

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Re: Anyone else concerned with Robinhood's business practices?
« Reply #4 on: January 04, 2021, 10:58:38 AM »
If I wanted to know what the dumb money was doing, I'd just drop into any internet forum, the Motley Fool, or the comments section on Yahoo articles. Reddit's Wall Street Bets is at a level of dumbness below which it would be impossible to use an electronic device, a sort of event horizon for stupidity beyond which no more can be seen. At the upper end of the stupectrum is Seeking Alpha, where mouth-breathers at least cite reasons why their stock picks will go to the moon or the world will end or both.

Also, naming the app Robin Hood while simultaneously using it as a way to sell user data to the rich while bankrupting millennials and gen Z is quite ironic. Shouldn't we assume anything on the internet is fake at this point?

PDXTabs

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Re: Anyone else concerned with Robinhood's business practices?
« Reply #5 on: January 04, 2021, 11:07:38 AM »

ice_beard

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Re: Anyone else concerned with Robinhood's business practices?
« Reply #6 on: January 04, 2021, 09:47:23 PM »
I completed a few trades with the platform this summer and then stopped.  The buy and sell prices do not match what I would/could get trading through Vanguard.  They make their money selling their trades to other brokerages (right?) and they or their brokerages are "skimming" on the prices.  The end buy and sell prices don't match at time of sale, either in their application or in competing brokerages.  I understand that prices on equities are constantly changing during trading hours.  What I experienced was not this.   

I suspect they will face a significant class action lawsuit in the not too distant future.  Or not, because this shadiness is written in their acceptance and acknowledgement of application usage which users gave away by installing the app.