Robinhood is Sending Big Checks to Customers.

quick reminder the 40 off coupon code

for my amazing programs on building your

wealth

including stocks options and trading

expires tonight

on june 30th take a look at that link

below hey everyone me kevin here

thousands of people are about to get

checks

from robin hood and i have a list of

exactly how much money

everybody is getting but first let me

give you a quick breakdown

as to what that is happening so

basically robin hood and finra entered

into a settlement agreement

where finra gets to go hear world these

are all of our complaints about robin

hood and robin hood basically goes

okay we don't agree or disagree but okay

we'll pay you 70 million dollars

okay it's kind of what's happening here

but we should go into some of these

details

just know that robin hood is not

officially responding to these items

here

maybe they will separately i don't know

if they can or can't i'm not an attorney

but we are going to go through at least

what finra's version is

and then let's go through to see who's

getting paid and for

what and how much so here's the thing

finra and we're going to go through the

legal brief as well where we see some of

the allegations

finra is demanding that robin hood pay

12.6 million dollars in restitution to

customers

and 57 million dollars in penalties

for screwing up finra is very unhappy

and the allegations they make are number

one

robin hood misled folks in terms of how

much negative

buying power they had how much actual

cash was in their customer accounts

and by misleading them leading to in

some circumstances potentially panic

selling or losses that wouldn't have

otherwise occurred

additionally robin hood also ran into

some issues where

folks believed they had margin trading

turned off but they still

ended up somehow getting involved in a

margin trading despite believing they

had

margin turned off or in the specific

case in june of 2020

somebody just saw a screenshot a 20 year

old college student

saw this particular screenshot of their

buying power sitting at

negative 730 000

on a 16 000 account this was during an

option

execution time frame where funds had not

settled yet so they got hit with the

debit

and not the credit yet and so their

account showed a negative 730

000 balance despite having margin turned

off

and so robin uh or finra clearly

identifies

that instances like this have led to

many many many many big losses for

customers

in fact they claim that thousands of

customers suffered more than seven

million dollars in total losses

and if you lost money because of

inaccurate

negative cash balances you are entitled

to

a restitution in fact seven million

dollars

is being returned to folks who lost

money because of inaccurate

negative cash balances additionally

finra alleges

that robin hood was somewhat lacks

in how they approve people for options

trading essentially saying that their

options account

approval bots ignored many red flags

indicating that certain accounts or

certain individuals

probably shouldn't be eligible for

options trading finra is also very upset

about the most serious outages that

occurred between march 2nd and march

3rd with robin hood where customers lost

tens of thousands of dollars and finra

is requiring the firm to pay more than 5

million dollars in restitution

to people affected during that time

frame so if you were affected

and you lost money and complained about

it because

of inaccurate negative cash balances

or because of the outages that occurred

on march 2nd

and 3rd you might be eligible for money

from robin hood or for getting some

money from robin hood now regarding amc

and gme the only thing i could really

find

in all of this was that finra found that

between january 18

and february 2021 which would encompass

the gme crisis on january 28th

finra basically just slaps robin hood

and alleges

that it failed to supervise the

technology it relied upon for core

broker services

there's nothing specifically related to

restitution for gme

now they do include that time frame in

here which

kind of implies that they also looked

into the gme situation

but aren't actually assessing any kind

of restitution for that now i'm not sure

if that totally closes the door to any

restitution coming from the gme crisis

where folks weren't able to buy option

contracts or shares of gme

i though would imagine that not being

able to buy

makes it very hard to prove a loss

whereas when robin hood just shut down

on march 2nd and 3rd you could kind of

prove your decline

in market value potentially potentially

more easily

so my guess is this probably closes the

door on the gme crisis

now what we can do as well is we can

look at some of the actual allegations

in their report here

in here finra alleges that customers who

had either robin hood

gold or not were eligible to turn off

margin investing but despite the fact

that people could turn off margin

investing

it says here and again this is finra's

allegation that robin hood has allowed

approximately 18

i'm sorry 818 000 customers who had been

approved for options trading

either instant customers or gold

customers with margin

disabled to make trades such as option

spreads

that could automatically trigger the use

of margin

so all of a sudden people who thought

margin was off were actually using

margin

this is again where finra talks about

the unfortunate suicide of the 20 year

old

college student who was at home from

college at the time of the incident

we also have another allegation here and

this is again mentioning here

that robin hood displayed inaccurate

cash balances

to more than 135 000

customers the firm displayed these

erroneous cash balances to robinhood

instant and gold customers

who either were randomly provided a test

account feature by robinhood

or who enrolled in the firm's cash

management program

they were left essentially with in some

instances

false information regarding the amount

of cash they had available some other

allegations here first robin hood

misstated the risk of loss associated

with certain options

spreads and then provided false

information about

actions the firm would take on those

spreads

resulting in losses totaling 5.73

million dollars

so potentially this this portion we

talked about

in uh with with money going out so

you've got one set of money about five

million dollars here going out

between for outages suffered uh march

second to third

this other seven million dollars here

regarding these negative cash balances

uh probably

also had to do with uh with this here

option

spreads so you probably had to have some

kind of loss related to option

spreads to qualify for a restitution

here

they also go as far as breaking down

robin hood's poor explanation

of option debit spreads like call debit

spreads here

calling it straight up false and

misleading some of the information that

robin hood had on their website

robin hood also issued erroneous margin

calls

and margin call warnings to over a

hundred thousand customers

the two significant events occurred in

the three-month period in a three-month

period in 2018

and affected more than 100 000 customers

uh leading to 1.65 million dollars in

losses

so you can kind of see it looks like you

would have had to have been involved in

at least for portion of this either

march 2nd or march

3rd 2020 or you would have had to have

lost money in 2018

or i'm sorry between october 16th and

september 2019

where robin hood issued you an erroneous

margin call

or you lost money due those call debit

spreads and

inaccurate balances showing up so those

are look like those are the folks who

are going to be getting restitution

could be others as well here uh some

other statements and allegations here

finra makes

that robin hood use the label equity

rather than

market value in certain cases which is

bad because

your market value could be a million

dollars but if half of that is debt then

your equity is only 500k

right but if it shows a million dollars

is equity that

overstates how much money you actually

have which could lead you to take on

riskier trades

we've got a mention here that robinhood

offered free stocks to folks

but the firm did not disclose that there

was a 98

chance that the free stock awarded would

have a value of only two dollars and

fifty cents to ten dollars despite

advertising stocks like apple ford or

sprint

which ford at the time was worth more

than the fifteen dollars when it sits

now

but anyway it's uh worth mentioning that

you can still get two free stocks with

weeble if you go to weeble

go to metkevin.com weeble deposit 100

and they'll give you up to two free

stocks totally for free

and they also somewhere at the bottom of

their website show you what your odds

are of getting that

i think i don't know i'm not an attorney

i'm just pitching

weeble because i use them daily but i

also use robin hood daily so

yeah anyway okay pitch over let's keep

going so some other allegations or

interesting notes that i saw under here

is robin hood didn't pay attention to

mission critical systems

we've got a note over here that robin

hood has to pay restitution of exactly

12 million

598 445 dollars and 16 cents

uh the rest are fees and penalties

you've got

dan gallagher for robin hood signed this

and uh they're being asked to wire

transfer

the full amount so that's going to be a

big bill that's getting sent over

and then i'm not sure if robin hood or

finra is sending this money out

but uh they're literally sending

thousands

of dollars to some people i mean here

you've got fourteen hundred dollars

going out three thousand three hundred

dollars going out

eight hundred dollars ninety dollars

twenty three dollars okay

ten thousand two hundred dollars so

you've got a bunch of customer numbers

here these aren't actual numbers these

are just the number of

affected customers and uh this goes on

and on and on i mean we go out to

over over i think 2 000 customers here

this is a list of

yeah 2832 customers and

for schedule 2 we've got total

restitution of 1.6 million dollars and

for schedule

uh one which i believe a schedule one

has to do with the options

i think that's where the big dollars are

coming out there are less

folks but restitution for schedule one

yeah

two million dollars right here so not

exactly sure where the schedules are

for uh the other uh like

i don't know 9 million dollars but i can

show you

where this is in case you want to look

this up yourself if you've been given

like a reference number or contact

number

basically what you want to do is you

just want to type in to google

finra orders record financial penalties

against a robin hood i'll show you

exactly how to do this

so you jump in to google type it in

finra

right here finra orders record financial

penalties against robin hood click on

this

you're going to go over here to this is

the statement we took a peek at

this right here is the robin hood

financial llc action

and this right here is where you're

going to be able to see all of the

individual sums of money that folks are

owed see six thousand eight hundred

eighty dollars so on and so forth so a

lot of folks are getting checks from

robin hood for what happened here

now uh what do i think about robinhood

going forward well folks

personally i think this is uh look robin

hood's massive

they they are one of the biggest players

in the space their website analytics

show a slight decline over the last

couple months but quite frankly their

website analytics appear to be way

higher than they were

before the january debacle i think this

is uh

you know a tiny kind of slap at

robinhood i mean think about it

70 million dollars is probably about

point one percent of their market cap

because they're probably worth in the

private market right around 70 billion

dollars

which means really if you had a thousand

dollar net worth that'd be like giving a

dollar

out of a thousand dollars or that kind

of be like giving a hundred dollars

if your net worth was a hundred thousand

dollars so it gives you a little bit of

kind of scale in terms of how big this

slap is

and so i'd say overall this is a slap at

robin hood obviously i expect that they

fixed a lot of these issues already i

think robinhood's going to keep growing

i think this is just going to get

written into the history books and

everybody's going to move on

hopefully this gets fixed and things

like this never happen again

the big thing is learning lessons and

moving on so obviously i wish robin hood

and the staff the best

this is a pretty scathing report but

remember it's also a one-sided report

though some of those things yeah you

know

there's probably a good chunk of truth

in a lot of what happened there with

finra

i don't know i can't speculate but look

people are gonna be getting money back

so at least some of the wrong is being

righted and as long as robin hood is

fixing these issues going forward

it's good they're here to stay they're

one of the biggest

trading firms uh and overall this is a

small little needle prick for robin hood

it'll be okay in the long run for the

company for the staff

for people who invest in the company i

don't think it's really going to make

that big of a deal for their ipo if

anything

it's better that this chapter has been

closed before the ipo

because now that uncertainty of how big

is the fine going to be in the future

are they going to get fined is closed

now i do think this kind of closes the

door

on maybe like any kind of restitution

being paid for the gm ears

who weren't able to buy calls or shares

uh

but uh you know we'll see we'll see if

somebody was uh mistakenly liquidated

maybe they'll be getting some

restitution from this although it looked

like

we're mostly looking at dates between

2016

and 19 with false cash balances

certain options and then march 2nd and

3rd of 2020

no specific mention to january 28th in

this anyway there you have it thank you

so much for watching and folks

we'll see in the next one