I don’t believe being “liable for users’ misfortune” is the issue here. While Robinhood showed the user being down hundreds of thousands of dollars, this was actually a UI issue and the user actually had a profit.
A lot of the anger with Robinhood comes down to the mistaken belief by many people that money moves instantly, trades happen instantly.
Robinhood UI is struggling to convey actual current value vs accrued unsettled value vs unrealized value.
These are non-trivial concepts. The time component of money confuses a lot of situations. Eg Most people treat retainers as revenue before it is earned; even SaaS companies treat MRR as earned before the time period elapsed and service is rendered. However this isn’t strictly correct or legal.
With a lot of these new Web services like Rh, GoPuff, Yelp, etc. it can be hard to get a hold of a real person in a timely manner.
Robinhood has similar moral liability of a payday lender: it's not wholly their fault if people choose to make bad choices for themselves, but they are partially responsible for enabling them and/or obsfuscating terms.
But in this instance, we're talking about pretty standard industry processes and practices.
If you hand someone a gun with the expectation they know how to use it, and the first thing they do is blow their brains out... not sure how that's on you?
The article in the top post is missing details. Robinhood actually demanded $170k from him to settle his account. It wasn't a UI issue.
Email is part of UI / UX. Either they were programmed loosely or the email was poorly worded.
> Monday’s lawsuit said Robinhood had an obligation to know its customers and ensure its trading strategies were appropriate, but instead the broker preyed on inexperienced investors.
Does robinhood actually have this obligation? Not knowing anything, I would assume they don't actually have to do this. Appropriate is subjective and nonsensical imo. Did the guy do something inappropriate? On one hand I think no, it wasn't especially crazy as a financial move. On the other hand, should a 20 year old who doesn't know anything be able to get involved in 100k margins? Idk. I do think robinhood preys on inexperienced investors. I'm interested to see how it can be argued as illegal.
Current law limits what many people can do in terms of the stock market specifically to protect unsavvy investors. What Robinhood is doing is no different than a 3rd party acting as a go between the stock market and an unsavvy investor but telling the unsavvy investor they went 700k+ in the hole.
The internet is slowly moving away from being the wild west, and things like this is a part of it.
As the circumstances show, this young man did not have a proper understanding of what his trades (including the not-yet-settled part) meant and what the actual financial consequences and risks were at that point of time when he (mistakenly) felt that they are horrific enough to take his life. Robinhood should have tested for that capability and, given the absence of it, ensured that he can not trade options on their platform and be limited to simpler, more understandable investment products. If they intentionally make this verification superficial so that they can get more unsophisticated investors trading tricky products on their platform, that is praying on investors and should be prohibited.