SIPC Says It Has Serious Concerns About Robinhood's New Product

Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by 300bps on Friday December 14, 2018 @11:22AM (#18681937)

You can open an Ameritrade or any other brokerage account and deposit money into the account with no intention of purchasing securities. There is no dispute that the SIPC would cover your account in that instance.

The only thing that has changed here is Robinhood is explicitly marketing their brokerage account as being able to be used as a savings account without any need to invest in securities.

It’s not black and white on either side. If there ever was a default event, it would surely go to court and it’s not 100% clear who would win. For that reason, I wouldn’t make use of the account.

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Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by devman0 on Friday December 14, 2018 @11:31AM (#18682022)

I'm not sure how Ameritrade works, but the other brokers I've used (Fidelity, Schwab, and Vanguard) you either have an 'uninvested' position where your cash is parked (generally a federal money market fund) or bank sweep that is FDIC insured. They never actually hold cash for you it is either in a money market or a bank sweep.

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Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by maratd on Friday December 14, 2018 @01:20PM (#18683087)

It's highly likely that Robinhood will do the same. It'll be parked in a money market, with the option of writing checks, etc. all of which you can do already with the other brokerages.

The new thing here I think is the ATM card and them covering the difference between the money market rate and 3%, which right now is less than 1%. They'll probably make up that difference via interchange fees when you use the debit card.

That SIPC thing though ... that's a bit of a wrench in the gears.

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Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by gcbw2 on Friday December 14, 2018 @05:26PM (#18685463)

Then why are those organizations saying they won't be insured?

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Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by aakilfernandes on Friday December 14, 2018 @12:10PM (#18682425)

What other reason would you have an Ameritrade account?

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Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by warp_factor on Friday December 14, 2018 @01:10PM (#18683008)

Zero fees on their international debit card (one of the best )

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Re:SIPC Says It Has Serious Concerns About Robinhood's New P... by gcbw2 on Friday December 14, 2018 @05:27PM (#18685467)

almost every bank has that. mine even reimburse the ATM fee.

(ok, unless you count the US crap list such as BoA, etc)

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