Robinhood Is Back in Washington’s Crosshairs After Leverage Glitch
- Flaw said to involve about 20 accounts and $100,000 in losses
- Regulators are asking what led to ‘infinite leverage’ trades
Source: Robinhood Markets Inc.
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Robinhood Markets Inc. is once again getting unwanted scrutiny in Washington after some of the brokerage’s customers took advantage of a flaw that allowed them to make highly leveraged trades without putting down enough cash to back the transactions.
The glitch, labeled the “infinite money cheat code” by Reddit Inc. users, was exploited by about 20 customers and triggered estimated losses of less than $100,000, according to a person with knowledge of the matter who asked not to be named because Robinhood hasn’t disclosed the figures. The episode has also prompted questions from brokerage regulators, who could fine Robinhood if they find compliance lapses.