Robinhood has been fined more than $130 million by the Securities and Exchange Commission (SEC) and FINRA, a brokerage governing body, for misleading and harmful customer practices. In November 2021, the company disclosed that hackers had accessed the names and email addresses of millions of Robinhood customers, calling into question the company’s security procedures. In 2021, Robinhood was a central player in the Gamestop saga, and CEO Vladimir Tenev was called to testify before Congress about how Robinhood may have exacerbated the situation. It is thought that the negative balance was associated with a complicated options trading strategy deployed by Kearns. Kearns took his own life after seeing an unexpected negative balance of more than $730,000 on his Robinhood app. In June 2020, a 20-year-old college student named Alexander E.
Major controversies have attended Robinhood’s approach in the past Robinhood also lacks many of the educational resources offered by the best online brokers for beginners.
This tends to drive active trading, or buying and selling stocks rapidly to turn a quick profit.ĭue to the amount of risk and the vast potential of loss involved with active trading, most experts recommend that almost all investors opt for passive investing or buying and holding low-cost index funds to grow wealth. It makes trading so easy that it practically turns it into a game. Robinhood offers new investors a platform designed to lower market barriers, courtesy of its bare-bones interface and low fees.īut here’s the problem with Robinhood.
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