June 5, 2021
The SEC is stating that July 1, 2016 through June 30, 2019 are the 'Harm Period' for Robinhood's defrauding activities.
Don't be fooled. Robinhood's criminal activity was most egregious during 2021. 2015-2021 are the actual 'Harm Period'.
The SEC wants us to believe that if in 2016 some one chopped down a tree in your front yard, came back in 2017 to steal your mail box, and burned down your house in 2020, that they should only be fined $5 for the tree and $10 for the mail box while your home is left smoldering in ashes.
That is the job the SEC is offering to do for you. For your tax dollars. Where is the justice? America can do better.
Robinhood:
Year Revenue
2015 $2.9 million
2016 $9.3 million
2017 $21 million
2018 $69 million
2019 $111 million
2020 $673 million
In 2020, Robinhood generated $673,000,000 in payment for order flow revenue. Pause to consider that this $673,000,000 does not represent the total amount that was defrauded from Robinhood investors during 2020. $673,000,000 is the commission that Robinhood made on the defrauding, the total amount lost by individual investors would be $673,000,000 + the profits made by market makers who purchased the orders.
It is difficult for the SEC to help individual investors be made whole. Systemic forces allow the shifting of blame, and regulations can be difficult to enforce amidst constantly changing requirements. But amidst all this, shouldn't the SEC be strong enough to build a proper case against the 2020 Robinhood? Is the SEC complicit in defrauding 2020 investors?
Here is an opportunity to highlight the need for more integrity in the U.S securities market.
When a company like Robinhood is allowed to base their revenue on defrauding their customers, they become complacent with the idea that defrauding behavior is standard. When the SEC fails to prosecute to the fullest extent of the law, Robinhood becomes increasingly complacent in defrauding individual investors.
Robinhood raised $3,400,000,000 in 2021. As of 2021, Robinhood is valued at $20,000,000,000. Does a $65,000,000 fine really deter this behavior? I would settle for nothing less than $500,000,000 and that is still lenient.