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Comment by tidepod12 | Hacker News Reader

>You have to go out of your way to trade options (they're disabled by default), and the only way you can get options enabled in Robinhood as a college freshman is to straight up lie on the application.

If all it took was a lie on an application for Robinhood to grant someone the ability to use extremely risky trading strategies, that's still Robinhood's fault. Robinhood isn't absolved of responsibility just because the student did something dishonest.

Given the fact he was 20 years old, his options application should have automatically been under a heightened degree of scrutiny, if not immediately rejected. That it wasn't indicates Robinhood is not responsibly implementing KYC controls, which is a huge deal.

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> If all it took was a lie on an application for Robinhood to grant someone the ability to use extremely risky trading strategies, that's still Robinhood's fault.

In your world, do we blame casinos when someone goes in and gambles away their money? My naive perspective sees no difference. The concept of an individual being responsible for their own terrible choices really seems to have changed unbelievably in the last 20 years.

When I ask a criminal barrister for advise, he/she carries some responsibility, and should have my best interest in mind. If I ask a guy on the street, he does not.

If Robinhood wants to carry same responsibility as casinos, they should call themselves a casino.

Then they will loose certain privileges like in UK it's illegal for casinos to provide leverage or 'gambling debt', they will be subject to payout percentage regulation, etc. https://www.casino.co.uk/guides/payout-percentages-rtp/

https://www.finra.org/rules-guidance/rulebooks/finra-rules/2...

Try CTRL+F "suitability" for a five-second read of why the casino comparison doesn't apply here.

For the personal accountability perspective, I would say it applies even more, since there are no requirements at all for walking into a casino and burning up $100k, yet we don't blame the casinos, we blame the person burning the money.

For the perspective that Robinhood owns his risk somehow, from not following their suitability guidelines, I'm not familiar with any of this so can't speak about it. Naively reading this, it appears to be extremely open ended, requiring a consistent internal process for approval, along with a warning, rather than anything specific.

"No member or person associated with a member shall recommend to any customer any transaction for the purchase or sale (writing) of an option contract unless such member or person associated therewith has *reasonable grounds* to believe upon the basis of information furnished by such customer after *reasonable inquiry* by the member or person associated therewith concerning the customer's investment objectives, financial situation and needs, and any other information known by such member or associated person, that the recommended transaction is not unsuitable for such customer."

The burden's on the firm to demonstrate why it believed the customer was qualified to trade the product, and to demonstrate that it made an effort to evaluate the customer's goals, finances, and needs.

Maybe the terminology is too foreign to me, but

> ... shall recommend to any customer any transaction ...

> ... that the recommended transaction is not suitable

Was Robinhood recommending transactions, or just enabling transactions? Even if not, this seems very open ended with no specifics, since “reasonable” is up for interpretation. I suppose we’ll see, probably sooner rather than later. I assume some actual specifics will result from all of this though.

The minimum age for gambling in many states is 21. So yes, if this 20 year old student walked into a casino and gambled away all his money, it would be the casino's fault for allowing that to happen.

You're an adult 18. I think people need to take more responsibility for their own actions instead of this increasing trend of treating adults as kids.

Children used to get more practice with making meaningful decisions and what not than they typically do today. A lot of 18 year olds aren't really prepared to behave like adults.

I'm not excusing it. I'm just making an observation.

And I'm not blaming parents for that. The world has changed and it's harder than it used to be to simultaneously protect kids and give them room to grow.

I generally agree. I think it also varies by location. I know 20 year olds who are married with kids and working in very adult jobs, such as the military or the mines. Generally these "kids" grew up in a more rural area and had less supervision and more responsibility.

And company's need to take more responsibility for their own actions as well, instead of blaming their users for being stupid. Predatory and aggressive behavior isn't made acceptable just because the person you preyed on was foolish.

Finance is one of the most highly regulated industries. If there was wrongdoing, the SEC would be all over it.

By your logic, you might as sue all auto manufacturers for not installing BAC interlocks on the vehicles they sell, or all tobacco companies just because the users are too stupid to read the giant warning labels. That's not the society I want to live in.

>If there was wrongdoing, the SEC would be all over it.

Like this? https://www.cnbc.com/2020/12/16/robinhood-reportedly-facing-...

>all tobacco companies just because the users are too stupid to read the giant warning labels

Like this? https://www.publichealthlawcenter.org/topics/commercial-toba...

In our society, we hold companies responsible for being poor citizens. And "our users are stupid" is not a valid justification for being a poor citizen, whether you like that or not.

I'm not talking about the part prior to the crackdown on tobacco. I'm saying there are still people using it after the giant warning labels.

They have an investigation, but we'll see what it turns up. Remember, we work on an innocent until proven guilty basis.

If you're saying that companies need to be good citizens or we shut them down, then you should close almost all businesses. You don't think the other brokers take the same steps that RH does? I can tell you from the inside that they do.

It took decades of lawsuits and to get those warning labels, which would vanish overnight if the government didn’t force it. Those decades included a lot of misinformation campaigns to the point of fraud. Most smokers simply cannot quit - they have tried dozens of times and most got hooked in high school

Are the people running the firm adults? Do they have responsibilities, like checking customer documents, picking up the phone and showing correct balance?

I don't believe they have to pick up the phone. They are a virtual company that does get back to people, but it takes time. If we are saying prompt replies are a required responsibility, then how do we tolerate the government's widespread slowness? The document checking and balances are a common thing across industry - documents are checked in automated systems that check the SEC criteria and balances are not instantly updated. Other brokers have these same issues.

If someone is 20, it's more likely that they have no idea what they're doing with options, and a brokerage has a regulatory requirement to ensure that options are suitable for the customer before approving an account for options trading. It's not a bright line; age is information that can be used to make a reasonable determination about whether the customer is cognizant of all the risks. At the very least, they should call and speak with young customers before approving.

They usually just use a questionnaire online. Most brokers aren't making phone calls unless it's absolutely necessary. Not saying it's the best way, but if RH is getting sued, then any other broker could be too. They could start testing people, like with a version of the CFA Fundamentals test.

We've created this bizarre feedback loop of treating older and older people to like children, which causes older and older people to act like children.

I know man, these hedgefund managers and Boeing executives have been totally infantilized!

I'm clearly talking about the 18-year-olds referenced in the post I'm replying to. But good job I suppose?

I am just pointing out that there is a range of people trying to absolve themselves of responsibility, and I am not clear what leads folks to conclude that 18-year are the problem.

When COVID/2008 hits the fan, its the young people on zero hour contract that loose their income first, landlords might loose some, and banks loose least.

If anything our system is setup so that the higher you are, the less consequences you face. I believe this is the new phenomenon and its not helped by 'kids these days, back in my day...'.

New phenomenon? You should read some history books! It’s never not been like this, it’s almost always been worse: thousands of years of those at the bottom losing everything while those at the top, if not getting assassinated in power struggles, get all the payoffs. As bad as it is today, it was almost always much worse in the past.

However 18 year olds are able to sign any legal document, and also join the military.

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