Comment by klmadfejno | Hacker News Reader

Comment by klmadfejno | Hacker News Reader

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"Issue" sounds like a bug though. It was an accurate number, the user just didn't understand the context of it. The question is whether it was illegal to get the user into that position without them understanding what they were doing.

> 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.

This is an area where the law needs to catch up.

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.

I feel that the current law would have worked just fine if it was enforced properly - current law (at least in EU where I live - as far as I understand, SEC guidelines in USA are similar, but I may be mistaken) expects that unsavvy investors should be prohibited to make such trades, partly because we know well from historical experience that often it leads to sad consequences such as this case.

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.

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