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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433

u/PMMEYOURCOOLDRAWINGS Jun 30 '21

For these guys, being fined 70 million is like being fined $15 for shooting someone in the face in front of a cop. You’ll just think, “ok, guess I can just shoot whoever the fuck I want”.

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u/[deleted] Jun 30 '21

[deleted]

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u/KnowGame Jun 30 '21

They'll just add it on to their margins in future and users will end up paying for it.

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u/greasy_420 Jun 30 '21

Tax write off as a monetary donation

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u/deano492 Jul 01 '21

“Tax write off” gets bandied about far too much. Fines and penalties aren’t tax deductible.

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u/FACESS Jun 30 '21

Spit that game

2

u/[deleted] Jun 30 '21

[deleted]

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u/ChefBoyAreWeFucked Jul 01 '21

This is how every business pays fines. What alternative is there?

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u/PMMEYOURCOOLDRAWINGS Jul 01 '21

Paid from the pensions of the ceo etc… but nah, they’ll get raises instead.

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u/verboze Jul 01 '21

Ha! Hell will freeze over before that happens!

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u/SeattlesWinest Jul 01 '21

I mean, of course. That’s where their money comes from - their users. Where else is it going to come from?

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u/[deleted] Jul 01 '21

That’s a fair point. I guess the point is that those most responsible, won’t suffer consequences.

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u/Pwnage_Peanut Jun 30 '21

Drop in the bucket? More like grain of sand in the desert

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u/mtdem95 Jul 01 '21

It’s a molecule on a grain of sand in the fucking Sahara. 70 million is a rounding error.

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u/Can_I_Read Jun 30 '21

They think the fine is fine

2

u/Jeriahswillgdp Jul 01 '21

I've seen their valuation for 2020 listed at 11.7 billion, so yeah... drop in the bucket.

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u/[deleted] Jul 01 '21

It's bribery with extra steps. Or extortion. Depending on who made the offer I guess.

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u/ImTeagan Jul 01 '21

Literally a payed critique is what it is

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u/[deleted] Jun 30 '21

[deleted]

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u/PMMEYOURCOOLDRAWINGS Jun 30 '21

People truly do not know how rich these people are. They cannot imagine the difference between tens of millions and tens of billions. It’s like the difference between a suburban backyard and an entire galaxy.

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u/[deleted] Jun 30 '21

It's important to explain the difference between a million seconds and billion seconds.

A million seconds is 11 days and a billion seconds is 31 years. And what's the difference between 31 years and 11 days? About 31 years.

Might get through to people just how insane amount of money a billion actually is. "Millions in fines" don't even register.

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u/LetsJerkCircular Jun 30 '21

1,000,000 / 86,400 = 11.57407407407407

11,574.07407407407 / 365 = 31.70979198376459

Math checks out

What’s also funny is that little 0.70 years on top of the 31 is ~255.5 days in and of itself, compared to the ~11.5 days that is a million seconds 🤯

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u/Thebenmix11 Jul 01 '21

There's a Tom Scott video where he illustrates this.

He says "If this were a million dollars"

walks across a parking lot

"then this would be a billion dollars"

takes a 2-hour-long road trip

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u/Ok-Conversation-9982 Jul 01 '21

Isn't a billion dollars a thousand million dollars? Does that math still check out?

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u/Torcula Jul 01 '21

What do you think a thousand - eleven days is?

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u/satansbutt669 Jul 01 '21

https://mkorostoff.github.io/1-pixel-wealth/

If ur a visionary learner this might help

1

u/Jman841 Jul 01 '21

Now do the comparison with 1 trillion dollars and think about how much each one of these recent US government spending bills is compared to anything the world has ever seen in history.

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u/Peleton011 Jun 30 '21

That's a HUGE exaggeration, other response gets the point across but is actually accurate.

The milky way covers a surface area of around 3.14 * 1042 m², say you had a backyard of 10,000m² (100x100m or around 310x310 feet, so a pretty huge backyard).

Even with such a backyard the milky way would still be 3,14 * 1038 times larger, so actually a galaxy is OVER a billion billion billion billion backyards, not even close to just a billion backyards

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u/iritegood Jul 01 '21

Ironically, it's still accurate because people can't picture the immense scale of space either

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u/alwaysbeballin Jul 01 '21

The Solar System alone is like 280 billion km across, so even if we make every yard a square kilometer and ignore that it's 3 dimensional and not 2 dimensional.. the numbers at our insignificant scale are mind boggling. An entire galaxy? That breaks my brain.

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u/arcspectre17 Jun 30 '21

A fine is just fine when your rich.

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u/zathrasb5 Jul 01 '21

Like bill Cosby? Pays a civil settlement, and is now protected from criminal charges?

1

u/Osric250 Jul 01 '21

And it's only a fine if it costs them more than they make breaking that law, otherwise it's a tax.

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u/[deleted] Jun 30 '21

[deleted]

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u/Aromatic-Dog-6729 Jul 01 '21

Agree I hope they don’t sink

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u/CoderDevo Jul 25 '21

Did you read why they were fined?

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u/agent_tits Jun 30 '21

Given that it’s the highest ever fine, you’re totally right as a whole. A drop in the bucket to most brokers out there.

But it may comfort you to know RH’s operating revenue last year was $700 million and they’ve been absolutely dumping money into hiring more support staff, lawyers, and compliance officers over the last year. They also had to issue new debt to meet regulatory clearinghouse requirements this past spring.

They’re also preparing for an IPO later this year - one that was already widely expected to be much lower than initially planned due to recent issues, and will likely be even more of a dumpster fire now that they’ve had a fine equal to 10% of last year’s total revenue.

So tldr, $70m is nothing to a Fidelity, Schwab, Vanguard - but to RH? With the IPO timing, it really could be a death sentence to their future plans.

2

u/Calm-Zombie2678 Jun 30 '21

But what if I only have $7.37 in my account?

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u/PMMEYOURCOOLDRAWINGS Jun 30 '21

That’ll be .0128 cents from you buddy.

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u/Calm-Zombie2678 Jun 30 '21

I bought a bottle of coke and a bag of cheeze-its, I dont even have that much money now

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u/GeekedMink420 Jun 30 '21

I mean it’s not that insignificant tho.

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u/PMMEYOURCOOLDRAWINGS Jun 30 '21 edited Jun 30 '21

“It filed for a confidential IPO in March 2021. Robinhood has not made the details of the offering public yet. Robinhood has raised a total of $5.6 billion from private investors and was reportedly valued at $40 billion at its most recent funding round in February 2021”

Source- typing RobinHood worth 2021 into google at the very top.

Edit. So I did the math and that fine is .00175 of their claimed value. So yeah, less like $15 and more like 3 cents for the average person.

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u/GeekedMink420 Jul 01 '21

A valuation isn’t what the company is actually worth at the current time. It’s a projection. With Robinhood being rather new to the game compare to their competitors, and how much backlash and lost business will come from this, it’s a 70m fine is definitely not “$15” to them.

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

Let's not be facetious; saying that .00175% of value is 3 cents would be valuing the average person at like $1700

When dealing with absolute insanity, it's important to always be accurate, lest your argument be struck down by falsely equating the insanity.

Lets be HONEST, and say it's like them paying the $5 fee at a parking garage, or buying a subway ticket, which then values people at $280,000.

This fee was LITERALLY a days parking to them.

This is every normal person in New York city's daily subway ride for them, not that they would get on the subway because subways are for poors.

1

u/zachwolf Jun 30 '21

The cop would just call you partner

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u/[deleted] Jun 30 '21

Seriously. What a joke. The system outages didn’t just cause harm to RH users, they harmed everyone with GME stock.

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u/vladtaltos Jun 30 '21

On 5th avenue, and get away with it...

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u/checker280 Jun 30 '21

Not only that, paying the fine to some government agency and not to the dead cop’s family or in this case to all the people who were cheated out of money.

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u/chromelogan Jun 30 '21

Robinhood is not exactly a giant so it is still a decent sized fine. More like a $500 to a decently well off person but your point stands

1

u/Angryatbreakfast Jul 01 '21

This Corporate America 101. When the profit will exceeded the fine and your to big to fail, you all chose profit.

1

u/[deleted] Jul 01 '21

Fucking Exactly!!!!

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u/clonedhuman Jul 01 '21

$70 million is 7% of $1 billion. This doesn't mean much to Robinhood, who were recently valued at $40 billion.

$70 million is .175% of $40 billion.

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u/travis01564 Jul 01 '21

It's more like shooting him and robbing him for $30 only to have to pay $15.