Robinhood Has Lured Young Traders, Sometimes With Devastating Results

NEW YORK TIMES

Millions of young Americans have begun investing in recent years through Robinhood, which was founded in 2013 with a sales pitch of no trading fees or account minimums. The ease of trading has turned it into a cultural phenomenon and a Silicon Valley darling, with the start-up climbing to an $8.3 billion valuation. It has been one of the tech industry’s biggest growth stories in the recent market turmoil.

But at least part of Robinhood’s success appears to have been built on a Silicon Valley playbook of behavioral nudges and push notifications, which has drawn inexperienced investors into the riskiest trading, according to an analysis of industry data and legal filings, as well as interviews with nine current and former Robinhood employees and more than a dozen customers. And the more that customers engaged in such behavior, the better it was for the company, the data shows. read more »

The man who led Wirecard into insolvency

REUTERS

It was James Freis’ first formal day on the job after his start date had suddenly been accelerated by the refusal that morning of Wirecard’s auditors to sign off on the 2019 accounts and the company’s suspension of its chief operating officer. As Freis, a former financial investigator at the U.S. Treasury, scanned the books he was struck by Wirecard’s unusual practice of relying on a third party to hold large sums of money in escrow on behalf of its subsidiaries that are present in countries where it doesn’t have its own operating licenses, according to a person with knowledge of the matter. read more »

CFTC Charges California and Colorado Residents in Ongoing Multimillion-Dollar Ponzi Scheme

CFTC

The Commodity Futures Trading Commission today announced it has filed a civil enforcement action in the Eastern District of California charging a number of individuals and entities with operating a $14.5 million binary options and retail foreign currency (forex) Ponzi scheme.

According to the complaint, the defendants misappropriated over $11 million to make payments to certain pool participants in a style consistent with a Ponzi scheme, and for personal use, such as personal travel, home renovations, limousine expenses, spa and haircare expenses, online gambling, and expenses relating to divorce and spousal support. read more »