Freetrade should really have 2fa
Only being able to withdraw to a linked bank account fortunately already prohibits this exact scheme from happening with freetrade.
it’s still a privacy issue if it happens though
Also doesn’t stop malicious activity, imagine some little git accessing your Freetrade account and selling all your stock, sure they can’t take your money but they can mess you over.
Why don’t we?
One of the victims said to have 2FA enabled. If your banking app and email have 2FA the risks are low if I am not missing something. It is a nice to have feature still
Customer Service is a must especially when a product malfunctions often.
AJ Bell just sent me a cheque for £250 off the back of one polite email I sent, due to not being able to access the account around October 28th when the market dipped and shifted into value stocks.
To send one polite short paragraph email to a company and have them understand and make a gesture that helps is a real relief in life.
From Ian King at Sky News. …and Freetrade gets a brief mention.
It’s a pretty chunky fine! Whilst they can afford it and will have already raised capital to cover, it can’t help their reputation:
“Deprived customers of $34.1m”
“The trading app repeatedly failed to disclose that it receives payments from trading firms for routing its customers’ orders, the SEC said. The regulator said that Robinhood had made these “false and misleading statements” during a period of rapid growth. Robinhood did not admit or deny the SEC findings.”
I thought it was common knowledge that Robinhood sold their order flow. Is there anyone who actually didn’t know this?
If I remember correctly a US journalist investigated and exposed RH back in early/mid 2019 after finding evidence their numbers didn’t stack up i.e. they couldn’t have been making the kind of money they were, through the ways they claimed at the time. It is now common knowledge.
(Anyone correct if that’s slightly off)
The other part of the fine was for gamification of stocks, not acting in the clients best interest and providing complex financial products to people they shouldn’t have:
“ The enforcement office found that large portions of the The enforcement office found that large portions of the Massachusetts public that Robinhood had approved to trade options had little or no investment knowledge, and that it had given the green light to some new traders even in violation of the company’s own policies.”
Brokers have to disclose their payments for order flow in the US, it’s normally buried deep but finding Robinhood’s wasn’t that hard. Google Robinhood Disclosure Library.
Robinhood had approved to trade options had little or no investment knowledge
Is this illegal, then?
I wouldn’t use the word illegal (in this case), more that they’ve fallen foul of regulations. It’s a conflict of interest as Robinhood is making money selling a complex financial product which is unsuitable for the consumer who will inevitably lose money. RH wasn’t acting in the best interests of the client and so the regulator is acting to protect the consumer.
Freetrade published how they handle conflicts of interests very early on, in order to build trust:
Who decides what’s unsuitable for a consumer? It’s up to the investor themselves to learn about options and decide whether or not they’ll have anything to do with them.
one does not always know what is best for themselves