back to article Robinhood hit with record $70m bill by financial watchdog for outages, misleading investors

Robinhood, the app that looks like the lovechild of a stock-trading platform and a video game, was hit with a record $70m bill by a US watchdog for causing investors to lose millions in total from misleading financial information and system outages. The Financial Industry Regulatory Authority (FINRA) ordered the software biz …

  1. Anonymous Coward
    Anonymous Coward

    s/investors/Large Financial Firms/

  2. Mike 137 Silver badge

    RobinHood

    Superbly named. It clearly turned out to be quite an effective robbin' hood.

    And what did the original do? Stole from the rich and gave to the poor. But I also remember the Phantom, who, according to Baldrick, was "half way to becoming Robin Hood" in that he stole from the rich but hadn't got round to giving to the poor yet.

    Maybe the service should have been called "Phantom".

  3. EricB123 Bronze badge

    You Mean Bots Don't Know Everything?

    Many years ago, I opened a stock trading account with Charles Schwab. More out of curiosity than anything else, I checked the "request account to allow options trading" box on the mail in form. I got a favorable response to the stock trading account in the mail, but in order to enable options trading to be added I was required to fill out a form stating on my prior experience with trading options, my general financial wealth and some other stuff I don't remember.

    Gosh, remember when companies actually cared about anything other then revenue?

    1. Anonymous Coward
      Anonymous Coward

      Re: You Mean Bots Don't Know Everything?

      Don't get excited, this was probably a mandatory questionnaire, and the broker would have faced penalties for non-compliance if they'd not sent it to you. This was an arse-covering exercise, make no mistake.

      1. Throatwarbler Mangrove Silver badge
        Holmes

        Re: You Mean Bots Don't Know Everything?

        Regardless, it's probably a good thing that Schwab sent out the questionnaire. If it was done to comply with regulations, then those regulations have done their job.

  4. Chris G

    TrApps

    There are dozens of trading apps advertising everywhere, including via Youtubers, they make it so easy to trade and many claim low or non existent commissions.

    Yesterday the FT had an article pointing out the £100million a month these no commission apps are making in commission.

    Trading is easy, and so is betting on the gee gees, you will probably make about the same profits too.

    1. MiguelC Silver badge

      Re: TrApps

      They basically make money by taking advantage of their clients, making them pay more than fair for the trades they do

  5. Pascal Monett Silver badge
    Thumb Down

    "will not admit nor deny any wrongdoing"

    I despise companies that are caught red-handed and yet still think they can save face by not admitting what everybody knows is true.

    1. Charlie Clark Silver badge

      Re: "will not admit nor deny any wrongdoing"

      It's what the lawyers advise. A regulatory fine is always preferable to an appearance in court, which is why so many settlements are made out of court. In some US cities plea bargains are so common that they're taken by the demonstrably innocent who want their lives back.

    2. MiguelC Silver badge

      Re: "will not admit nor deny any wrongdoing"

      Albeit officially sanctioned, it works exactly like paying a bribe: you pay some money to make the charges go away

    3. Chris G

      Re: "will not admit nor deny any wrongdoing"

      It may be time for a change in how the law s are administered, willingness to pay the fine or settlement should be considered an admission of guilt that should by virtue of the admission be treated a little more leniently than if a defendant insisted on arguing in court, still being found guilty and having cost the court time and money, the admission of guilt being recorded as such.

      Make the penalties for a guilty verdict much harsher.

    4. Anonymous Coward
      Anonymous Coward

      Re: I despise companies that are caught red-handed and yet still think

      I despise the regulators, or rather those that regulate the regulators (so, basically, the politicians). The incentive should be: you do the crime, you own up and cooperate and you get punished. But, if you do the crime and do NOT own up and do NOT cooperate, the punishment will be much, much harder. Instead they 'incentivize' criminals by, effectively, making them pay the bribe to the state / regulator to continue unpunished, and the bribe melts away in the state system.

  6. Jeff 11

    The problem with these regulatory actions is that they're tame enough to be considered a 'cost of doing business' for the arseholes who know they can break the law and reap the rewards. $70m is probably a fraction of the profits reaped over the 5 years of dodgy business practices they're supposed to be punishing.

    Fines that push the business into bankruptcy and jail time/asset forfeiture for the top levels of the org chart are the only ways to disincentivise the next lot of pricks who have a similar idea.

  7. Anonymous Coward
    Anonymous Coward

    Compliance

    As someone who works in financial technology, I can attest that one of our biggest challenges over the years has been ensuring that the algorithms which drive compliance operate reliably and with acceptable performance. The sheer number of rules to manage is quite significant, and it's easy for a poorly-architected or poorly-managed trading system to come to its knees. Outages notwithstanding, most "old school" banks take seriously the need to execute trades correctly because their reputation and profits depend on doing so. Robinhood may ride out this particular set of failures, but the reputational damage may be what does them in.

  8. Anonymous Coward
    Anonymous Coward

    FINRS is not a government agency

    “The Financial Industry Regulatory Authority (FINRA) is a private American corporation that acts as a self-regulatory organization (SRO) which regulates member brokerage firms and exchange markets. FINRA is the successor to the National Association of Securities Dealers, Inc.“

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