Posted on 12/17/2020 6:14:01 AM PST by RoosterRedux
The Securities and Exchange Commission on Thursday charged Robinhood with deceiving customers about how the stock trading app makes money and failing to deliver the promised best execution of trades.
Robinhood agreed to pay a $65 million civil penalty, without admitting or denying SEC’s findings.
“Between 2015 and late 2018, Robinhood made misleading statements and omissions in customer communications, including in FAQ pages on its website, about its largest revenue source when describing how it made money – namely, payments from trading firms in exchange for Robinhood sending its customer orders to those firms for execution, also known as ‘payment for order flow,’” the SEC statement read.
“One of Robinhood’s selling points to customers was that trading was ‘commission free,’ but due in large part to its unusually high payment for order flow rates, Robinhood customers’ orders were executed at prices that were inferior to other brokers’ prices,” the statement went on to say.
The millennial favored trading app is best know for pioneering the “commission free trading.” Robinhood, and the rest of the online brokerage industry, rely on what’s known as payment for order flow as their profit engine in lieu of commissions.
Taking payments for order flow from Wall Street firms is a controversial, but legal practice done by most electronic brokers, however Robinhood sticks out because it is the company’s biggest revenue source.
(Excerpt) Read more at cnbc.com ...
Turns out they steal from the poor and give to the rich?
At least they weren't gay.
I have a Ameritrade account where 99.99% of my money is and they have 2 day trading.
I put in $500 in a Robinhood account but have let it ride on AMD shares which have more doubled. I never tried the instant trading.
Wait. They are saying that “free” doesn’t mean it is free, and that the company is making money off of its customers?
Young folks today really are gullible, aren’t they. They probably also believe in “man made global warming” and the dangers of WuFlu as well.
I have thought of opening a/c's at other firms so I can execute from more than one trading platform at the same time.
I was going to try day trading but the AMD stock just kept going up on it’s own so no need to.
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