Robinhood's Luster Stained Again With a Record $70 Million Fine

An anonymous reader shares a report: Robinhood Markets unleashed a revolution, marshaling throngs of new traders to financial markets in an upside-down year. But the free trading app's breakneck growth hurt the same small-time investors it sought to empower. That's the accusation leveled by Wall Street's self-funded watchdog, which extracted almost $70 million from the brokerage in a record settlement Wednesday, including a $57 million fine and about $12.6 million in payments to aggrieved customers. It follows Robinhood's meteoric rise against the backdrop of the Covid-19 pandemic and the frenzy over hot stocks such as GameStop Corp. that warped the realm of retail trading.

Whoops, they weren't legal...

[The New Guy 2.0]

Robinhood was founded on the idea that powerful trading tools could safely be given to the iPhone... just like early eTrade there was nobody to call fouls, or help users out of dangerous situations. Sorry, they didn't invent a new wheel, they invented one without the nuts and it fell apart.

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[Anonymous Coward]

Robinhood was founded on the idea that they could harvest the investment strategies of an infinite supply of retards on smartphones and then sell that data to Citadel to use to leverage the markets in Citadel's favor.

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[AmiMoJo]

Some of it sounds like the app was just badly written and didn't present information clearly, like the people who thought they were hundreds of k in the hole when they hadn't even enabled margin trading.

Some of it just sounds like they are upset people noticed the Gamestop thing and got rich from it, which was totally legitimate as far as I can tell. It's not illegal to bet against the short sellers, but they seem to be upset that they didn't see it coming and were not able to limit their losses, i.e. make

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[The New Guy 2.0]

Now let's add the latest story... Robinhood is filing for an IPO, after such a large fine makes them a money-loser.

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[Mattcelt]

Being pedantic... Bill Cosby is un-convicted. He has not been acquitted, nor ruled innocent in any meaningful way.

As for Robinhood... sure they're guilty of $70-million-worth of something.

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[Orrin Bloquy]

"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black

Brave. I'm literally trembling in my threatened masculinity right now. Speak your truth.

The fine is a pittance

[Revek]

They owe the people they screwed much more than that. The way the fines work for the wall street crowd it would be like being fined a penny for reckless driving.

I Love It!

[Lab Rat Jason]

I love Robinhood... I trade on Fidelity... but I love Robinhood because they've opened the market to the uneducated masses... who just drove the price of Virgin Galactic through the roof and I made a killing, simply because they have no concept of stock values. When the price comes back down to earth I'll buy back what I sold for half the price. Same with Tesla, and same thing is about to happen when Holicity closes the deal with Astra. A ton of stupid investors will rush in and buy the new shiny, and t

Attribution is hard

[gadb2]

Attribution of profits in trading is notoriously hard to do. The brokerage "paid for" model is the one area where you can see what you pay to make use of the plumbing. It's expensive, although there is a market for execution services. But it's frustrating how that market never seems to get more efficient. A lot of that has to do with greedy exchanges leveraging and enjoying monopolies, because liquidity tends to cluster (just look at what bet-"fair" charges). It varies considerably between different eq