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The Almighty Buck Bug

Robinhood Glitch Steals From the Poor, Gives To the Rich (yahoo.com) 71

Posted by BeauHD from the technical-difficulties dept.
theodp writes: On its Careers page, zero-commission online broker Robinhood explains its founders "decided it was more important to build products that would provide everyone with access to the financial markets, not just the wealthy. Two years after heading to New York, they moved back to California and built Robinhood -- a company that leverages technology to encourage everyone to participate in our financial system." But on Monday, at least, the advantage went to the wealthy. Bloomberg reports that Robinhood suffered an outage that lasted the entire U.S. trading day and prevented customers from making trades as stocks surged after last week's rout (status). Just another reminder that we're all just one technology fail away from chaos.
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Robinhood Glitch Steals From the Poor, Gives To the Rich More

Robinhood Glitch Steals From the Poor, Gives To the Rich

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  • WTF kind of headline is that? (Score:5, Insightful)

    by ACisBack ( 6658200 ) on Tuesday March 03, 2020 @06:39AM (#59790924)
    Their platform was borked, they didn't "steal" anything, and most certainly did not steal from the poor & give away to the rich. Yes, if you used Robinhood for trading and absolutely had to buy or sell some shares that day, your plans were screwed, but if you want guaranteed uptime, maybe you should look into paying for that.

    • Re:WTF kind of headline is that? (Score:5, Informative)

      by hwihyw ( 4763935 ) on Tuesday March 03, 2020 @08:15AM (#59791064)

      I actually clicked on the Yahoo link to see if the headline was from the original article, nope. Slashdot is now worse than Yahoo.

      • Re: (Score:2)

        by hey! ( 33014 )

        You must be new here. Slashdot's editorial team has always been worse than [fill in just about anyone else here].

        They choose stories and headlines produced by an infinite number of monkeys, and our role is to haughtily heap scorn on the process.

    • No retail brokerage guarantees uptime, even back in the days of high commissions there would be outages.

    • Re: (Score:1)

      by geek ( 5680 )

      Welcome to the new slashdot editorial team. These ass clowns are the worst in the sites history.

    • Re: (Score:3)

      by Swistak ( 899225 )
      You are actually paying for that with RobinHood. It has uptime guarantees. Not to mention that regulatory agencies enforce uptime to. If the internet channel is down, they are supposed to provide orders via phone/email. But of course as every internet startup they were massivley understaffed there to (to the point their email system borked up during the day to from the overflow).

    • I am paying for it (Score:4, Informative)

      by KalvinB ( 205500 ) on Tuesday March 03, 2020 @12:30PM (#59792106) Homepage

      Robinhood isn't trading your shares for free. They make money on the spread. And with delayed pricing they hide the spread.

      I just made a trade on JCP (don't judge me) and the price on the buy screen showed about 66 cents per share. The trade confirmation says 71 cents per share. Could be a price delay, could be the spread. The truth is, it's mostly the spread. They make about 3-5 cents per share on that trade. The historical business model was for banks to make money on the spread and a flat fee. They just got rid of the flat fee.

      Robinhood isn't running a charity. They lost a massive amount of money as well by not being able to process trades.

      Collectively, their customers are in fact paying them to keep their platform running. If they weren't, Robinhood would be bankrupt.

  • Reports online suggests it's a leap year bug (Score:4, Informative)

    by Rei ( 128717 ) on Tuesday March 03, 2020 @06:41AM (#59790928) Homepage

    Specifically [twimg.com], that it was counting days by index, and ended up trying to fetch data for the 3rd of March, which of course didn't exist.

    Pretty amateurish if true.

  • Move fast and break things (Score:5, Funny)

    by mobby_6kl ( 668092 ) on Tuesday March 03, 2020 @07:22AM (#59790962)

    Reminder that this is the app that let people build infinite leverage and fuck themselves spectacularly: https://youtu.be/A-tNkuYV4_Q [youtu.be]

    That said I'm all for getting more people who have no clue what they're doing to trade their savings away.

  • Not their first major bug. I'm amazed people are willing to put money in a platform that is looking more and more amateur-hour.

    • Re:Amazing (Score:5, Informative)

      by Rei ( 128717 ) on Tuesday March 03, 2020 @07:40AM (#59790998) Homepage

      There's more fundamental issues. A lot of Robinhood's income comes from selling user trade data to high-frequency traders. Even if they don't outright frontrun your trades, you're giving them an information advantage.

      • Re: (Score:2)

        by Hodr ( 219920 )

        I'm sure someone pays for that data, but it's probably of limited value. I doubt many serious traders use the platform as their primary tool.

        I use Robinhood, but only to park a little cash so that it can collect dividends (rather than pathetic interest rates) while being immediately available to take advantage of a good opportunity. And I don't consider trying to time entire market swings as good opportunities.

        I have twice so far been able to buy options within a minuite or so of hearing a good tech rumor

        • Re: (Score:3)

          by Rei ( 128717 )

          If someone is paying for the data, it's more valuable to them than what they're paying for it.

          The classic way to use such data is frontrunning. You place an order. A high-frequency trader makes the exact order before you, your order goes through (at the now-higher price), then they place the inverse order. Now, direct frontrunning is illegal... but beyond the fact that it still happens, there's plenty of legal ways that you can use the data that have the same sort of effect.

  • Their website is still down: https://robinhood.com/us/en/ [robinhood.com]
     
    My guess is they took the customers account money and ran! Well, it WAS in the name of the website. My guess is they are spending the first world Millenial money right now at some beach in a third world having some poor people bring them Pina Coladas.

  • It's hood robbin'.

  • Seems like a temporary rally to me. (Score:4)

    by twocows ( 1216842 ) on Tuesday March 03, 2020 @09:22AM (#59791186)
    I think the original drop was too much too fast, hence yesterday's rally (it was a correction), but I also don't think the supply chain issues that caused it have suddenly ceased to be. I think that over the next year or so, we're going to slowly see the results of the supply chain issues in the quarterly earnings reports of various businesses. It won't be a sudden market-wide drop like the past two weeks, but it will be a slow burn of businesses underperforming due to supply chain issues. I think the 40 quarters of growth we've seen will probably either flatline or trend slowly down for the next year or two. It'll recover eventually, of course.

    It's too volatile this year, but I'm planning to see where things are at either at the end of the year or maybe next year and then put a significant cut of my savings into QQQ and maybe a few other things. I've been adding more and more to QQQ over the past 15 years or so and they've been not only a great performer, but have done so pretty consistently and with very little volatility. It tracks heavily against the state of the tech industry and I think the supply chain issues are going to hit the tech industry disproportionately hard, which is why I'm holding off for now.

    • I dunno, the correction seems about appropriate considering half of China is shut down for a month and Europe and North America will likely follow. S&P was only at like September 2019 levels. This is probably a dead cat bounce and it'll continue falling a bit; no amount of rate cuts is going to help if everyone has to sit at home for a month and eat ramen.

      That said please listen when people say time in the market > timing the market. I sold off some of the portfolio last week and the price is already

  • When exposing financial tools "of the wealthy" to the poor, why do we assume that the poor would want to be day traders? It's a high-risk venture best undertaken by those with a warchest that they can afford to lose. At a minimum. Let's not delve into the other advantages the rich have when day trading that can make their venture more successful.

    Anyone assuming a Buffet-esque "buy and hold" strategy would not be fased by temporary market momentum. Generally the market is still trending upward, minus the

  • if we don't want to be. The problem we have is we've given way, way too much power to the "Too Big to Fail" types. The solution is to take that power away through regulation.

  • Robin Hood was NOT about Rich taking from Poor (Score:4, Insightful)

    by schwit1 ( 797399 ) on Tuesday March 03, 2020 @10:21AM (#59791404)

    The Robin Hood story was about Prince John overtaxing the poor. Prince John was THE GOVERNMENT, not the rich.

    • Not just Prince John but also his corrupt officials, like the Bishop and the Tax Collector. The Robin Hood stories were essentially libertarian. I want to scream every time I hear someone smugly spew that "takes from the rich, gives to the poor" line, because it is so politically and historically ignorant.

    • Eh, that's an oversimplification. It of course all depends on which source you want to use, and modern sources will have different emphases than older ones. But really if we can generalize, Prince John does not represent the government as such but rather illegitimate authority obtained by wealth and political intrigue. The modern source Ivanhoe, for example, associates this with the conflict between the relatively disenfranchised Anglo-Saxon nobles and conquering Norman nobles. So it's not quite a conflict

    • Re: (Score:3)

      by hawk ( 1151 )

      the specific tax being stolen was to pay for the Common Law courts--the first time the little guy had a shot at a fair shake in a dispute with his feudal overlords.

      Until these courts provided "writs" to remove cases to the king's courts, you would have to sue your baron in his own court, with himself providing . . .

      all in all, John was one of Britain's better monarchs (albeit the Magna Carta was probably signed at the wrong end of a spear), while "Good King Richard" was one of the worst, and barely spent ti

  • Bad Day for Robinhood (Score:3)

    by KalvinB ( 205500 ) on Tuesday March 03, 2020 @12:26PM (#59792076) Homepage

    Robinhood had a lock on "free" trading for awhile but now multiple banks are offering the same thing as well as other startups like WeBull.

    They had the first mover advantage but with this big of a screw up, that is a massive liability as now people are highly motivated to focus on the other accounts they probably already have. Robinhood has no leverage to keep people on their platform and just gave a major signal to not stay on it.

    I've had an Ally account since before they offered free trades, I have a Chase account which appears to offer free trades as well (when I opened it, I had 100 free trades for a year and now their terms are little confusing but whatever) but I haven't made many moves in that account lately, and I have a WeBull account.

    But, since Robinhood was the first free account I opened, it's the only one with a regular deposit going into it. The others I just periodically make moves in to get free stocks or just bump up my holdings.

    That's changing now. Robinhood absolutely cannot be trusted to work when it counts so as soon as they stop being broken, that auto deposit is getting switched over to WeBull. And then there's a good chance all my holdings will be moved to WeBull.

    If WeBull screws up, the process will move to the next bank.

    A pencil that doesn't pencil well is one thing, but a pencil that doesn't pencil gets thrown in the trash.

    • Re: (Score:2)

      by PPH ( 736903 )

      If WeBull screws up, the process will move to the next bank.

      There's a time factor involved in that. Sure, you can drop an incompetent broker and move on to a better one. But you have missed a major market move and opportunity to get in on the profits.

      I'm not sure why Robinhood fell on its face. Maybe an internal problem or one of those outfits that leases web services from the cloud and didn't have a plan in place for a trading spike. Perhaps it was their links (through a series of wholesale brokerages) to the exchanges that died. When exchange trading volumes jump

  • I think these companies need to be held responsible when something like this happens If not criminally, by lawsuit.

      Value of what was lost plus 10x damages seems fair.

  • Hoodrobbin'

  • Hardly commission free. [robinhood.com]

    $25 for a domestic wire transfer, FFS. Etc.

    Speaking as a developer of actually free (zero required payment for full functionality or operational longevity) software, this kind of low-life marketing disingenuousness just pisses me off. Taints the word free. Further.

    Oh well. There's a sucker born every... yeah.

  • I'm happy they tried. Maybe next time it'll work out.

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