Losses & profits. Throughout history, Robin was a bandit or vigilante. A translation error turned the legend of the English Robinhood into a French Robin des Bois (Robinwood). But the term hood, “Hood”, can also be translated as ugly. Walter Scott, in 1819, in his novel Ivanhoe, froze the image of the rebel who took from the rich to give to the poor. On Wall Street, we no longer have many illusions about the nature of the Robinhood Internet application. During its last round table, in August, this site, which makes it possible to invest in the stock market very easily and without any commission, was valued at 11.2 billion dollars (9.1 billion euros).
But what bothers the stock market authorities are above all the methods of the company founded in 2013 by two students from California Stanford University, Vlad Tenev and Baiju Bhatt. To stand out from the competition, the two friends decided to target beginners in finance, and particularly young people. They borrowed video game codes to encourage people to invest, win and start over. The first transaction on the site is greeted by a shower of confetti. It worked beyond their expectations. They attracted 13 million customers, half of whom had never touched the stock market before. According to a complaint filed by authorities in Massachusetts, some of these apprentices, whose average age is 31, place more than 90 stock market orders per day. The confinement of course helped recruit new thrill-seeking followers.
$ 65 million fine
Worse still, the Federal Stock Exchange Constable, the Securities and Exchange Commission, fined the company $ 65 million for selling its clients’ investments at a profit to large hedge funds like Citadel. Robinhood has also pushed sophisticated products, like options, to a newbie audience.
The start-up tells another story, that of a vigilante who helped democratize investment by making it easy and very cheap. So, hero or crook? Perhaps the wisest thing is to take the advice of Warren Buffett, the stock market icon for millions of Americans. “Invest only in what you understand, otherwise, go your way. “
