Robinhood Users Come Under Attack — WSJ, Vlad Tenev (Document 582-8)

Summary

WSJ opinion commentary ‘Robinhood Users Come Under Attack’ by Vlad Tenev, dated Sept. 27, 2021, filed as Document 582-8 in Case 1:21-md-02989-CMA and entered 06/21/2023 on the FLSD docket. Tenev writes that critics are attacking commission-free, no-minimum brokerages and calling Robinhood’s platform gamified, and says that brokerages following Robinhood’s lead in dropping commissions in late 2019 put about $13 billion back in the hands of retail investors, by one estimate. He says Robinhood’s own surveys show that about half of its customers are new to investing and that they are more racially diverse than those at traditional brokerages. He defends payment for order flow, saying it lets Robinhood offer commission-free investing without minimums and that a ban would likely re-erect barriers that kept many out of the market.

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     Case
6/21/23,      1:21-md-02989-CMA
         1:21 PM                                   Document 582-8   Entered
                                                              Robinhood        on Under
                                                                        Users Come FLSD    Docket
                                                                                        Attack - WSJ 06/21/2023 Page 1 of 2

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  https://www.wsj.com/articles/robinhood-users-regulation-retail-investing-order-flow-access-to-capital-investing-11632776071


  OPINION       COMMENTARY          Follow


  Robinhood Users Come Under Attack
  Some critics say the app is ‘gamified,’ but building wealth should be fun, not
  complex and difficult.


  By Vlad Tenev
  Sept. 27, 2021 6:25 pm ET




  PHOTO: ANDREW KELLY/REUTERS


  Amid the turmoil caused by the global pandemic, people who had been left behind by Wall
  Street started investing and creating wealth like never before. But now market gadflies,
  academics, and out-of-touch investors are attacking commission-free, no-minimum
  brokerages, potentially limiting access to capital markets.

  The democratization of investing is no accident. Following Robinhood’s lead, many
  brokerages across the industry dropped commissions in late 2019 after charging them for
  decades. By one estimate, this put about $13 billion back in the hands of retail investors.
  We’ve helped a generation of digitally savvy customers engage with and understand
  investing.

  Our business has come under attack by critics who insist that our platform is “gamified.” They
  point to features such  as lists
                     Subscribed    ofGoogle
                                with  stocks and exchange-traded funds that help people discover
                                                                         Manage
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  investments and notifications about stock movements that help them stay informed. We
  designed these features, many of which are common in our industry, to make it easier and
  more delightful for users to stay informed. Investing isn’t a game, but must it be grim and
  difficult to understand?




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  Meanwhile, some critics decry not only modern investing platforms, but also the people who
  use them, suggesting that new investors are uninformed gamblers looking to get rich quick.
  Not only are these stereotypes offensive, but the data tell a far different story. According to
  the Finra Foundation, many new investors in 2020 began saving for retirement with a small
  amount of money. Robinhood’s own surveys indicate that our customers—about half of whom
  tell us at sign-up that they are new to investing—are more racially diverse than those at
  traditional brokerages.

  Payment for order flow also is in the regulatory crosshairs. Robinhood accepts payments from
  market makers that execute our customers’ trades at better prices than are generally
  available on exchanges. Brokerage firms have used this practice for decades. Before
  Robinhood, most firms received payment for order flow and charged upfront commissions.
  The money brokerages like Robinhood get from these market makers lets us offer
  commission-free investing without minimums, which has helped a new generation of retail
  investors get started. A ban on payment for order flow is unlikely to help retail investors get
  better prices and would likely re-erect barriers that kept so many out of the market.

https://www.wsj.com/articles/robinhood-users-regulation-retail-investing-order-flow-access-to-capital-investing-11632776071   2/2


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