Do Robinhood’s Customers Understand Its Business Model? With that kind of money invested, by these high-powered venture capital firms, there’s no way a few nuisance fines and lawsuits is going to slow this cockroach down. In addition to Ribbit, other well-known investors in the brokerage include ICONIQ Capital, Sequoia Capital, Andreesen Horowitz, and New Enterprise Associates. The most recent round was a $2.4 billion injection from Ribbit Capital, which should cover the penalties Robinhood will likely have to pay over the next few years (if history is any guide). Robinhood has raised a total of $5.6B over 23 funding rounds.

Moreover, Robinhood requires users to sign a user agreement that (1) requires users to go to arbitration before instituting a lawsuit and (2) provides that Robinhood may, in its sole discretion, prohibit or restrict trades without prior notice.” Cockroaches Are Indestructible-And So Is Robinhoodįines and legal action won’t slow Robinhood down for two reasons: 1) the big money behind Robinhood, and 2) the willingly-clueless customers doing business with the brokerage. Robinhood’s fiduciary duties to its customers are highly limited courts have determined that stockbrokers generally do not owe a fiduciary duty unless a customer has delegated discretionary trading authority to them. “Robinhood will not be held accountable because the lawsuits are almost certain to fail as a matter of law. According to an article in the Minnesota Law Review: Robinhood Financial, LLC, alleges breach of contract and breach of fiduciary duty for halting trading unfairly and causing massive losses for users. Since the GameStop debacle earlier this year, nearly 90 lawsuits have been filed against the brokerage. The FINRA fine isn’t Robinhood’s only legal trouble.

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