An SEC complaint on Thurs put a spotlight on how @RobinhoodApp chose to make money at the expense of its customers when selling customer trades to Wall Street.
Robinhood's own employees found evidence this was happening and raised concerns with senior executives.
An internal Robinhood report from 2019 “concluded that Robinhood customers would be better off trading at another broker-dealer” for any trade of more than 100 shares.
The top financial regulator in Massachussets, meanwhile, concluded this week that Robinhood was pushing unsophisticated investors into risky trading practices, even when it violated the company’s own internal policies.
We took a deep dive into @RobinhoodApp's business model -- and the problems it is causing some customers -- earlier this summer.
The new SEC complaint against Robinhood gives one of the first inside views of a shadowy practice known as 'payment for order flow' that sits at the base of how retail investors trade stocks
The details show how RH used the system to make money at the expense of customers/1
With payment for order flow, retail brokers like Robinhood let Wall Street firms trade again their customers in exchange for a fee.
These firms, like Citadel and Virtu, have long said they can give small investors the best prices for their stocks/2
But the SEC says it found records of a conversation where one Wall Street firm told Robinhood that it could choose between getting higher fees for itself or better deals for its customers (a higher price when a customer is selling, and a lower price when they are buying)/3
New detail on how the turmoil at Coinbase has hit the company's efforts to secure its Bitcoins.
Among the people who resigned this fall - to protest new internal policies - were 4 of the 7 people on the most critical security team, the "key management team," sources told me.
The "key management team" is responsible for securing the cryptographic keys to Coinbase's cold wallets, where most of the company's crypto tokens are held -- somewhere in the neighborhood of $30 billion I was told.
No job is more fundamental to the company's success.
These jobs require incredibly specialized expertise and are not easy to replace. I was told that losing more than half the team has set back new projects and required lots of internal scrambling to backfill roles.
This was only briefly mentioned in today's story about Coinbase, but managers surveyed Black employees at the end of a summer of turmoil to see how they were feeling
The resulting report did not paint a pretty picture.
In one period -- in late 18, early 19 -- almost all of the company’s Black employees left in a short period of time, with nearly a dozen of them making complaints to managers and HR before leaving.
“Most people of color working in tech know that there’s a diversity problem. But I’ve never experienced anything like Coinbase," Alysa Butler, who worked in recruiting at Coinbase, told me.
Just got this slide from a confidential Circle presentation. It does more to explain Circle's acquisition of Poloniex than anything I have seen today.
Takeaway: the SEC did indeed informally indicate to Circle that regulators would "not pursue any enforcement action for prior activity" at Poloniex as long as Circle cleans up Poloniex and turns it into a regulated exchange.
The SEC seems to be saying here that it's okay if you broke the rules, as long as you get acquired by a legitimate player before we crack down on you.