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Oh, in that case it's definitely fraud because, as you pointed out, it's clearly intentional (you have to repeat the trick many times). But the $8 billion ques

by pnako 7y ago

Oh, in that case it's definitely fraud because, as you pointed out, it's clearly intentional (you have to repeat the trick many times). But the $8 billion question is: are we talking about an obscure bug, a missed case in an otherwise perfectly sound valuation and risk management model, or is it actually a case of dodgy valuation and risk modelling? Which implies that many well-meaning clients are also seeing the wrong portfolio value, and trading with invalid margins? Again, I don't have the details so I don't want to speculate too much, but apparently they've had similar "bugs", so it's possible that their entire valuation and risk model is dodgy. It has happened to more reputable organizations.

lallysingh 7y ago
Bugs in the software come from bugs in the process. They are showing their process in their inaction. If their stuff was generally sound except for this, they would have shut down margin trading until the bug is fixed.
- tptacek 7y ago
  It's hard to think of a bug or vulnerability that you couldn't compose an argument like this for. Does it matter? They left the back door unlocked; you'd still get in trouble for letting yourself inside.
  - lallysingh 7y ago
    They clearly don't take the issue very seriously, as they allow margin trading to continue. That is not normal. They're exposing customers to more risk than they should be, and that's a very serious no-no. I don't think small bugs in high quality shops would fall under this argument.
    - tptacek 7y ago
      What's a "small bug"? What's a "high quality shop"? I've spent years doing software security assessments for much larger financial service firms than Robin Hood, and found far worse things than this.
      - lallysingh 7y ago
        The broker/dealer I work for stops trading on bugs causing much smaller (even $0) material impact. For brokers in particular, they are highly regulated and I can't imagine them not ending up with a nasty investigation+large fine from regulators over this.

by pnako 7y ago

lallysingh 7y ago

Bugs in the software come from bugs in the process. They are showing their process in their inaction. If their stuff was generally sound except for this, they would have shut down margin trading until the bug is fixed.

tptacek 7y ago
It's hard to think of a bug or vulnerability that you couldn't compose an argument like this for. Does it matter? They left the back door unlocked; you'd still get in trouble for letting yourself inside.
- lallysingh 7y ago
  They clearly don't take the issue very seriously, as they allow margin trading to continue. That is not normal. They're exposing customers to more risk than they should be, and that's a very serious no-no. I don't think small bugs in high quality shops would fall under this argument.
  - tptacek 7y ago
    What's a "small bug"? What's a "high quality shop"? I've spent years doing software security assessments for much larger financial service firms than Robin Hood, and found far worse things than this.
    - lallysingh 7y ago
      The broker/dealer I work for stops trading on bugs causing much smaller (even $0) material impact. For brokers in particular, they are highly regulated and I can't imagine them not ending up with a nasty investigation+large fine from regulators over this.