What just happened? In a case of kicking someone when they're down, Robinhood, the company behind the popular investment app, has been hit with a $30 million fine just as it announced almost a quarter of its staff are being let go and a net loss of $295 million in Q2.
Starting with the staff-cut news, company CEO and co-founder Vlad Tenev announced that Robinhood would reduce its headcount by approximately 23% as part of a broader company reorganization into a General Manager structure.
Tenev said while all parts of the business will be affected, the main areas will be operations, marketing, and program management functions. The move comes just a few months after Robinhood laid off around 9% of its staff in April.
[...] But Robinhood's woes haven't ended there. New York's top financial regulator has fined the company's crypto unit $30 million for alleged violations of anti-money-laundering and cybersecurity regulations.
The Wall Street Journal writes that The New York State Department of Financial Services found significant failures in the company's management and oversight of its compliance programs. A supervisory exam and investigation found Robinhood's Bank Secrecy Act and anti-money-laundering compliance program was insufficiently staffed and failed to move from a manual monitoring system following the company's increase in size.
[...] In addition to the fine, Robinhood must retain an independent consultant to evaluate its actions in addressing the issues highlighted by the regulator.
(Score: 4, Interesting) by Thexalon on Friday August 05 2022, @10:44AM (2 children)
I've seen dying companies before. Heck, I've been in a couple over my career. Upper management will fire anybody and everybody trying to get one more paycheck for themselves, in large part they know they are not going to have too many career prospects now that they didn't get out in time. The odds of the company making it are slim to none.
If you work for them, get out while you still can.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by Revek on Friday August 05 2022, @11:20AM
Wall street types are worse in that their motto might as well be 'We will do anything for just one more day'. Vlad would wreck the country to keep his excesses.
This page was generated by a Swarm of Roaming Elephants
(Score: 4, Funny) by Anonymous Coward on Friday August 05 2022, @11:23AM
The Sheriff of Nottingham strikes again
(Score: 5, Interesting) by stretch611 on Friday August 05 2022, @05:06PM (3 children)
Its all the way business are created since the start of the internet. Every business now grows on borrowed money... anything other than growth only occurs after they are big and dominate the market. Everything is run like a dot-com boom bust cycle.
They new rules seem to say that you do not need to worry about being profitable until after you are huge and then you will reap the rewards.
When your startup cash is gone, get a Venture capitalist. When VC funding is gone go to a major bank or Private Equity. When that funding is gone go to wall st and the stock market. Only after all funding is gone do you start to worry about being profitable.
Rules and compliance works the same way... Start by saying your are too small to need to follow the rules... when that doesn't work, make an excuse that you do not need to do that because you are fundamentally different from the competition. Just like profitablility, ignore all calls for regulation until after you are huge. After all, once you are huge you can afford to do the things you should be already.
Of course when operating like this you will either get huge before everything else catches up to you or go bankrupt/forced to close before you even get there. Most will take the latter path and be destroyed into the obscurity of history. A small percentage will really hit the jackpot and be bought out by a bigger company that does not even know what you do. (This creates a big payout to all the initial investors which is why they do it again and again.) In the end it does not matter as the founder always seems to pay themselves first with more money then they possibly deserve; so win or lose they always get paid... and will start it all over with a new company after they leave the first one.
This is not a case of being kicked when they are down; It is a case of compliance laws catching up to them before they got big enough to deal with them.
Now with 5 covid vaccine shots/boosters altering my DNA :P
(Score: 1) by khallow on Friday August 05 2022, @10:57PM (2 children)
Keep in mind that creating and protecting huge businesses is one of the side effects of lots of regulation (assuming such protectionism isn't part of the primary intent). In a world where regulation has such detrimental effect, then it makes sense for small businesses to attack that.
(Score: 0) by Anonymous Coward on Saturday August 06 2022, @12:42AM (1 child)
"raising the barriers to entry" for the newcomer do the well established incumbent can use the " economies of scale".
Monopolies are quite profitable.
A good working relationship with lawmakers will leverage the forces and authority of law, paid for by the taxpayer, to enforce the public to line the pockets of the monopolists.
I find it amazing what people put up with before coming after lawmakers with pitchforks.
(Score: 1) by khallow on Saturday August 06 2022, @02:32AM
When there's someone else to blame like those shifty start ups, that aren't playing by the rules that only favor big business, corruption, and stagnation, it can take a while to understand.