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As noted by @asanwal[0] this can be seen as both deceptive and smart. Here's the reality - when you get a $6B valuation, you are accepting VC-fueled growth fate

by mbesto 8y ago

As noted by @asanwal[0] this can be seen as both deceptive and smart. Here's the reality - when you get a $6B valuation, you are accepting VC-fueled growth fate, which means you are on a tightrope to grow at all costs. It's a gamble, but if executed successfully will lead to exponential growth and thus outsized investment returns. Here's my personal problem - there is much needed punitive damages for this type of behavior. Until we have people in power that understand why these situations (deceptive advertising) are problems, then, well, let's be honest, we're gonna see the Wild West flourish full of cowboys and Indians. [0] - https://twitter.com/asanwal/status/1073945507100270592 https://twitter.com/asanwal/status/1073945507100270592

JumpCrisscross 8y ago
> there is much needed punitive damages for this type of behavior I'm a fan of Robinhood. But this calls for more than a slap on the wrist. Not punishing someone misrepresenting their FDIC or SIPC insurance status is a horrible precedent. Not only does it show a green light to scammers. It also corrodes the protective, anti-run value these programs provide to depositors and investors.
- AnthonyMouse 8y ago
  I don't know. The fact that it was done completely publicly (and therefore was discoverable and discovered immediately) basically moots any need for harsh penalties. They were essentially testing the fences. That isn't bad, especially when it's done completely in the open. It gives the regulators an opportunity to say "no" and shut it down immediately if they want to, or say nothing and let it proceed. If they say no, it doesn't happen long enough for anybody to really come to any harm. And the alternative is that nobody is willing to try anything new just because there is no existing precedent explicitly saying that it's OK.
  - JumpCrisscross 8y ago
    > the alternative is that nobody is willing to try anything new just because there is no existing precedent explicitly saying that it's OK The part that was grossly problematic was Robinhood falsely claiming it was SIPC-insured. SIPC insurance isn’t automatically granted. There isn’t any useful innovation limited by telling people “try new things, but don’t lie about having certifions you don’t have.”
    - AnthonyMouse 8y ago
      A plausible explanation is that they expected it to apply. "Try new things, but never make a mistake" is essentially equivalent to "never try new things."
      - eropple 8y ago
        C'mon. Never try new things? How about ask before you start promoting them? You think a couple phone calls with SIPC wouldn't have disabused them of the notion? This is slack laziness and cavalier disrespect for their userbase. I had started toying with Robinhood; I immediately pulled everything I've got back out. They aren't trustworthy custodians.
        AnthonyMouse 8y ago
        > How about ask before you start promoting them? You think a couple phone calls with SIPC wouldn't have disabused them of the notion? Why is that supposed to be necessary? The government is more than capable of telling you if it's a problem, and if it's not a problem -- which is the default -- it would only waste resources on the part of everyone. What I suspect may have happened here is that the traditional banks soiled themselves when they saw the announcement and started calling around to see who they could get to put a stop to it. The head of the SIPC essentially said as much in the article: "This has gigantic ramifications for the banking industry." As if his role is to save the mortgage banks from competition. > I had started toying with Robinhood; I immediately pulled everything I've got back out. They aren't trustworthy custodians. Presumably they're SIPC insured. :)
        JumpCrisscross 8y ago
        > Why is that supposed to be necessary? If I say “I’m insured by AIG,” I actually need to be insured by AIG. It’s not AIG’s job to tell me I’m lying. SIPC coverage isn’t automatically granted. Robinhood already has SIPC coverage through their brokerage products; this is abundantly clear to everyone there. Whether through fuck-up or will, they ignored a clear regulatory line.
  - mbesto 8y ago
    > If they say no, it doesn't happen long enough for anybody to really come to any harm. They just got 600k people to signup. Even if they convert 10% of those for brokerage accounts (and not checking) it's probably worth it. This reminds me of Lance Armstrong and Trek Bicycles. Trek doesn't have to return any of its record profits for all of the years they sponsored a cheater. (for the record, I own several Trek bikes and they're fantastic)
- acjohnson55 8y ago
  But at this point, have they actually offered this service to anyone? If you already have an account, can you use this today? If not, it kind of seems like no harm, no foul. But even if so, it's hard to see how anyone has been injured at this point.

by mbesto 8y ago

JumpCrisscross 8y ago

> there is much needed punitive damages for this type of behavior I'm a fan of Robinhood. But this calls for more than a slap on the wrist. Not punishing someone misrepresenting their FDIC or SIPC insurance status is a horrible precedent. Not only does it show a green light to scammers. It also corrodes the protective, anti-run value these programs provide to depositors and investors.

AnthonyMouse 8y ago
I don't know. The fact that it was done completely publicly (and therefore was discoverable and discovered immediately) basically moots any need for harsh penalties. They were essentially testing the fences. That isn't bad, especially when it's done completely in the open. It gives the regulators an opportunity to say "no" and shut it down immediately if they want to, or say nothing and let it proceed. If they say no, it doesn't happen long enough for anybody to really come to any harm. And the alternative is that nobody is willing to try anything new just because there is no existing precedent explicitly saying that it's OK.
- JumpCrisscross 8y ago
  > the alternative is that nobody is willing to try anything new just because there is no existing precedent explicitly saying that it's OK The part that was grossly problematic was Robinhood falsely claiming it was SIPC-insured. SIPC insurance isn’t automatically granted. There isn’t any useful innovation limited by telling people “try new things, but don’t lie about having certifions you don’t have.”
  - AnthonyMouse 8y ago
    A plausible explanation is that they expected it to apply. "Try new things, but never make a mistake" is essentially equivalent to "never try new things."
    - eropple 8y ago
      C'mon. Never try new things? How about ask before you start promoting them? You think a couple phone calls with SIPC wouldn't have disabused them of the notion? This is slack laziness and cavalier disrespect for their userbase. I had started toying with Robinhood; I immediately pulled everything I've got back out. They aren't trustworthy custodians.
      - AnthonyMouse 8y ago
        > How about ask before you start promoting them? You think a couple phone calls with SIPC wouldn't have disabused them of the notion? Why is that supposed to be necessary? The government is more than capable of telling you if it's a problem, and if it's not a problem -- which is the default -- it would only waste resources on the part of everyone. What I suspect may have happened here is that the traditional banks soiled themselves when they saw the announcement and started calling around to see who they could get to put a stop to it. The head of the SIPC essentially said as much in the article: "This has gigantic ramifications for the banking industry." As if his role is to save the mortgage banks from competition. > I had started toying with Robinhood; I immediately pulled everything I've got back out. They aren't trustworthy custodians. Presumably they're SIPC insured. :)
        JumpCrisscross 8y ago
        > Why is that supposed to be necessary? If I say “I’m insured by AIG,” I actually need to be insured by AIG. It’s not AIG’s job to tell me I’m lying. SIPC coverage isn’t automatically granted. Robinhood already has SIPC coverage through their brokerage products; this is abundantly clear to everyone there. Whether through fuck-up or will, they ignored a clear regulatory line.
- mbesto 8y ago
  > If they say no, it doesn't happen long enough for anybody to really come to any harm. They just got 600k people to signup. Even if they convert 10% of those for brokerage accounts (and not checking) it's probably worth it. This reminds me of Lance Armstrong and Trek Bicycles. Trek doesn't have to return any of its record profits for all of the years they sponsored a cheater. (for the record, I own several Trek bikes and they're fantastic)
acjohnson55 8y ago
But at this point, have they actually offered this service to anyone? If you already have an account, can you use this today? If not, it kind of seems like no harm, no foul. But even if so, it's hard to see how anyone has been injured at this point.