Robinhood agreed to pay $65 million to settle with SEC in regards to not properly disclosing that high frequency traders (HFT) frontruns the investors’ orders.
Yup, nothing is free. The free commission comes from frontrunning and not getting the best bid-ask- There is always a cost. It is embedded somewhere you just don’t see it.
So next time, you see something is free- Be wary nothing is free.
Back to the lack of disclosure- Yes, lack of disclosure is a problem and it is great that Robinhood is settling. But I don’t think most Robinhooders care even with the disclosures and warnings. Just like credit card disclosures, people don’t read them and don’t care….
However, I believe as Robinhooders gain more experience and increase their investments, they will see the importance of bid ask and move to other platforms. Now how long that will take, not so sure. And many will likely explode before such learning because of their lack of discipline…but I remain optimistic that there will be more Robinhooders that get wiser with time than those who blow up and exit the market forever.
They have been also sued for aggressively luring naïve investors. Yet let’s give them credit for being on the news and bringing a whole new generation to join the market where a lot of wealth is being created.
Finally, remember that nothing is free and always do your due diligence and manage your risk when investing-
God bless us all 😀
Thank You Jesus for all Your love and mercy. Let us always be thankful and share Your love and riches with others.
Rejoice at all times. Pray without ceasing. Give thanks in every circumstance, for this is God’s will for you in Christ Jesus.
1 Thessalonians 5: 16-18