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I have read anecdotes that their ToS is geared towards them owning the securities because they pool purchases. Their business model is the brokers are the ones

by matt_s 5y ago

I have read anecdotes that their ToS is geared towards them owning the securities because they pool purchases. Their business model is the brokers are the ones that actually pay them and potentially hold the securities. Also, from their recent "Systemic Supervisory Failures" [0]: > Between 2018 and late 2020, Robinhood experienced a series of outages and critical systems failures. The most serious outage occurred on March 2 and 3, 2020, when Robinhood’s website and mobile applications shut down, preventing Robinhood’s customers from accessing their accounts during a time of historic market volatility. In the event of a large market downturn could you actually transfer that 60k elsewhere or for that matter, even access the platform to exit positions? Payment for order flow means you are likely in line behind which ever Wall St firm is paying for that order flow. Yes that is illegal for them to do (called front running I believe) but the fines they pay are usually tiny compared to the revenue. [0] https://www.finra.org/media-center/newsreleases/2021/finra-orders-record-financial-penalties-against-robinhood-financial https://www.finra.org/media-center/newsreleases/2021/finra-o...

atombender 5y ago
Robinhood is a broker-dealer, and is subject to the same regulations as everyone else. All the major brokerages hold securities under their name ("in street name") on behalf of the customer. You still retain legal ownership, even for fractional shares. As far as I know, Robinhood has its own clearing house subsidiary, Robinhood Securities, that handles the share bookkeeping, including the fractional share inventory you're talking about.
- matt_s 5y ago
  What I was referring to is most RH accounts are setup as margin because of instant deposits. This means they can liquidate that account without your action. IANAL but it might help to compare their TOS against other brokers. This latest fine isn’t there first fine. I wouldn’t trust them with a penny. There is too much shady stuff coming to light with RH.
- dannyw 5y ago
  Only in America, mind you. In Australia, all publicly traded companies are under CHESS, which means that when you buy a share, it's directly held in your name.

by matt_s 5y ago

atombender 5y ago

Robinhood is a broker-dealer, and is subject to the same regulations as everyone else. All the major brokerages hold securities under their name ("in street name") on behalf of the customer. You still retain legal ownership, even for fractional shares. As far as I know, Robinhood has its own clearing house subsidiary, Robinhood Securities, that handles the share bookkeeping, including the fractional share inventory you're talking about.

matt_s 5y ago
What I was referring to is most RH accounts are setup as margin because of instant deposits. This means they can liquidate that account without your action. IANAL but it might help to compare their TOS against other brokers. This latest fine isn’t there first fine. I wouldn’t trust them with a penny. There is too much shady stuff coming to light with RH.
dannyw 5y ago
Only in America, mind you. In Australia, all publicly traded companies are under CHESS, which means that when you buy a share, it's directly held in your name.