June 5, 2021
Hello,
It is encouraging to see penalties enforced against market-unfriendly practices, but the nominal amount is the equivalent of a pint of water to extinguish a house fire. While one might applaud Robinhood for bringing new investors to the stock market, one could even more plausibly argue that the company is continuing an apparently time-honored tradition of sophisticated theft from small investors. By way of analogy, the local police force would not accept my paying back two-thirds of the cost of a car I had stolen literal years after the crime, let alone the jail time I would face for grand theft auto, and this is neglecting the effects of inflation and time use of money which further decreases the actual cost of the paltry fine listed.
A cynic would suggest that the relationship of the SEC and the offending party is akin to a corrupt cop getting kickbacks in protection money from an illegal or ethically-dubious business, where the intent is never to stop the unethical behavior, but to profit from it instead.
This may have worked in the past and to some degree may work in the future, but the music will stop for the US stock market at some point if some of the blatant corruption is not reined in. The SEC would do well to remember the effects of 2008 and consider the market of today in light of this. Many Americans, including myself, have had the economic fallout of that time seared into our memories. As a physician, the direct and indirect cost in human life continues to outrage me. As an unsophisticated investor, the foolishness of the supposed smart money who have continued to destroy economic value for short term fleeting gains nonplusses me. Regulators ought to recognize that financial instruments cannot provide outsized gains forever without capital being injected into the stock market. Altogether, the events of the past year and a half have very firmly convinced me that the US stock market is a device to funnel money from average Americans to the powerful. Since the financially powerful have destroyed the real economy before, perhaps it is time the real economy destroys the market and takes its money elsewhere.