Massachusetts regulators file complaint against Robinhood, alleging manipulation of customers

Z

Zor_Champ

The wildly popular trading platform exposed Massachusetts investors to ‘unnecessary trading risks,’ according to the complaint

Massachusetts regulators filed a complaint against Robinhood on Wednesday, accusing the popular trading app of failing to act in the best interests of its users.

The complaint cites Robinhood’s “aggressive tactics to attract inexperienced investors, its use of gamification strategies to manipulate customers, and its failure to prevent frequent outages and disruptions on its trading platform.”

The complaint is the first enforcement of Massachusetts’ Fiduciary Rule, which Secretary of the Commonwealth William Galvin began enforcing in September.

“Robinhood, which earns revenue for trades executed by its customers, gave customers with no investment experience the ability to make a potentially unlimited number of trades, without properly screening them to be approved for options trading,” a statement released in conjunction with the complaint reads.

According to the regulator, 68% of Massachusetts-based Robinhood customers were approved for options trading after reporting limited or no investing experience.

“Treating this like a game and luring young and inexperienced customers to make more and more trades is not only unethical, but also falls far short of the standards we require in Massachusetts,” Galvin said in a statement.

https://www.cnbc.com/2020/12/16/rob...ts-regulators-over-targeting-young-users.html
 
Zor_Champ said:
“Treating this like a game and luring young and inexperienced customers to make more and more trades is not only unethical, but also falls far short of the standards we require in Massachusetts,” Galvin said in a statement.

https://www.cnbc.com/2020/12/16/rob...ts-regulators-over-targeting-young-users.html
More...

We all started as "young and inexperienced customers" that made more and more trades!! That's how we learned and eventually become old and a little experienced customers. If you never let them start somewhere, they will never be able to trade. Are you willing to spend billions of dollars to teach them how to trade before they spend any money? No. Then you should step aside and let Robinhood provide the platform for the "young and inexperienced customers" to learn. If you really care about those "young and inexperience customers" who lost money, set up a trading loss compensation fund to compensate for their losses.
 
I think this is the key like here...

"...According to the regulator, 68% of Massachusetts-based Robinhood customers were approved for options trading after reporting limited or no investing experience..."

That is bad, no?
 
Overnight said:
I think this is the key like here...

"...According to the regulator, 68% of Massachusetts-based Robinhood customers were approved for options trading after reporting limited or no investing experience..."

That is bad, no?
More...

Wanna bet they start emphasizing education all of a sudden?
 
Robinhood doubled down on their business model as a response to this, stating that they are making the markets available to everyone – a Robinhood spokesperson stated that “Those who dismiss new and younger investors, who come from increasingly diverse backgrounds, as unsophisticated or unserious perpetuate the myth that investing is only for the wealthy”, accusing the ones that filed the complaint to be elitists.

Somehow I don't see that approach working out all that well for them.
 
You must log in or register to reply here.
Back
Top