Economic Collapse

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Robinhood Investing App Secretly Makes Millions Selling Millennials' User Data To HFT Firms

( Who wudda thought ??? )

Stealing from millennials to give to the rich. Robinhood App sells user customer data to make a quick buck from the high-frequency trading (HFT) firms on Wall Street.

Robinhood Financial, LLC, a US-based mobile stock brokerage company, founded on the basis of disrupting the brokage industry by offering commission-free trading, has been secretly making millions of dollars in a profit scheme by selling users' data to HFT traders, said Logan Kane, a writer for North of Sunset Publishing.

Kane said the latest Second Quarter Securities and Exchanges Commission (SEC) filing shows that Robinhood Financial takes from the millennial and gives to the HFT firms.

"Robinhood accept payment for order flow, but on a back-of-the-envelope calculation, they appear to be selling their customers' orders for over ten times as much as other brokers who engage in the practice. It's a conflict of interest and is bad for you as a customer.

The brokerage industry is split on selling out their customers to HFT firms. Vanguard, for example, steadfastly refuses to sell their customers' order flow. Interactive Brokers, which is the preferred broker for sophisticated retail traders, doesn't sell order flow and allows customers to route orders to any exchange they choose.

Robinhood not only engages in selling customer orders but seems to be making far more than their competitors from it. Among brokers that receive payment for order flow, it's typically a small percentage of their revenue but a big chunk of change nonetheless," Kane said.

This represents, a severe breach of confidentiality for its over four million active users, and a remarkable act of deception from the Silicon Valley firm that promotes ethical trading practices to benefit the everyday American, but as we discovered via Kane's reporting -- the company is handsomely profiting from the average person by selling users' order flow.

Robinhood's website presents millennials with feel-good statements and hypocritical statements like:

"Invest for free: We believe that the financial system should work for the rest of us, not just the wealthy. We’ve cut the fat that makes other brokerages costly, like manual account management and hundreds of storefront locations, so we can offer zero commission trading."

"Trusted by Millions in the USA: We’re serious about security and use cutting-edge technology to ensure your personal information is fully encrypted and securely stored."

"Introducing Free Options: Trading Find out how to trade options the Robinhood way. It’s quick, straightforward & free."

Kane explains that brokerage firms that sell order flow must disclose these transactions to the SEC.

He said: "there is a material difference in the disclosures between what Robinhood and other discount brokers are showing that suggests that something is going on behind the scenes that we don't understand at Robinhood."

More...
https://www.zerohedge.com/news/2018-09-15/robinhood-investing-app-makes-millions-selling-users-data-high-frequencstealing