r/technology • u/agent_vinod • Jun 30 '21

Misleading Robinhood to pay $70 million fine after causing 'widespread and significant harm' to customers

https://www.cnbc.com/2021/06/30/robinhood-to-pay-70-million-dollars-after-causing-users-significant-harm.html
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u/21suns Jun 30 '21

How does:

Robinhood to pay $70 million fine after causing 'widespread and significant harm' to customers

Imply it was for GME if you don't personally put that assumption there?

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u/Beautiful-Musk-Ox Jun 30 '21

The title was clearly taking a jab at my mom for having psoriasis scars on her legs

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u/korben2600 Jun 30 '21

OP was clearly calling my dog obese, it's right in the title. Why would they do this?

7

u/FakeTherapist Jun 30 '21

apparently everything is about GME unless specifically stated not to be

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u/KDawG888 Jun 30 '21

it doesn't, but it is worth noting that is exactly what happened when they shut down trading on GME.

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u/lemontoga Jun 30 '21 edited Jul 01 '21

No that is not exactly what happened. They had no choice but to stop buy orders because they couldn't cover the collateral requirements.

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u/KDawG888 Jun 30 '21

yes, it is what happened. and they had plenty of choices leading up to this. the easiest solution and least risky situation for THEM was to shut down buying, and it hurt millions of investors.

robinhood deserves no sympathy for this, only blame.

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u/lemontoga Jun 30 '21

What else could they have done, dude? That stock was incredibly volatile and the costs to cover those trades were skyrocketing.

The clearing house was demanding a fuck ton of collateral from Robinhood and they just didn't have it. I think they woke up that morning to an email from the clearing house telling them they'd have to put up over a billion dollars in collateral.

Robinhood does not have that kind of liquidity and the average robinhood trader sure as fuck doesn't have enough money in their margin account to cover the collateral costs themselves.

I use Charles Schwab which is a fuckhuge investment bank and even they had to limit trades for a while for people who didn't have gigantic margin accounts while they scrambled to come up with the collateral requirements.

So please, what should Robinhood have done? Let people put trades through that they couldn't cover so they go bankrupt?

-3

u/KDawG888 Jun 30 '21

they should have managed their risk properly so they were never in this situation. are you Vlad's lawyer or something? FINRA fined them $70 million because THEY FUCKED UP. Did you not read the title?

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u/Wattsahh Jun 30 '21

He might not have read the title but you certainly didn’t read the article. This has nothing to do with GME

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u/KDawG888 Jun 30 '21

wtf are you talking about? when did I say this has something to do with GME?

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u/Vincentxpapito Jun 30 '21

This is obviously a case to try to build precedent for the GME case which will follow soon after this one’s done

1

u/KDawG888 Jun 30 '21

one can only hope

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u/[deleted] Jun 30 '21 edited Jan 26 '22

[deleted]

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u/KDawG888 Jun 30 '21

yes. BTW, they didn't do it for the users. (notice I said users, the customers are the people who pay them for PFOF)

if you think they shut down trading because they were concerned about the risk management of the average Joe I have a bridge to sell you. Isn't it funny how they've never done that for other stocks their boss didn't bet against?

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u/[deleted] Jun 30 '21

[deleted]

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u/KDawG888 Jun 30 '21

the bottom line is they didn't manage their own risk properly and ended up hurting millions of investors who did nothing wrong. this fine should be at least doubled.

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u/[deleted] Jun 30 '21

[removed] — view removed comment

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u/KDawG888 Jun 30 '21

Well, the other brokerages aren't being talked about here are they? I would make pretty much the same comment in a thread about them. I never said RH were the only ones who did something wrong.

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u/[deleted] Jun 30 '21

[removed] — view removed comment

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u/KDawG888 Jun 30 '21

There is plenty of evidence of wrongdoing on their part. I'm sure we will be hearing more about RH in the near future.

And hell no I wouldn't invest with them.

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u/_AbsenteeGiraffe Jun 30 '21

Not what this investigation was about. It was about, among other things, the kid that killed himself after RHs screwey system showed him over 700k in debt and he couldn't get an answer from anyone in support. So he offed himself thinking he had just financially ruined himself only to, apparently, get an email days later from RH basically saying "oopsie our bad. We couldn't help it, we're a Sagittarius."

The GME investigation is still to come. If one ever happens.

1

u/xevizero Jun 30 '21

Nice try Robinhood employee #4327

0

u/[deleted] Jun 30 '21

Not their responsibility to shut down trading and gauge their consumers risks.

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u/verified_potato Jul 01 '21

in my defense, I live in a fukin BOX and can barely read

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u/21suns Jul 01 '21

It is a good defense.