Robinhood offers credits to some customers, says it fixed engineering issues after outages

  • Robinhood is looking to rebuild trust with users by offering credits to some customers affected by recent trading outages. The start-up also said it has fixed engineering flaws that led to those glitches.
  • The start-up saw multiple outages in March that caused traders to miss out on a historic market rally.
  • “An apology alone won’t rebuild your trust in us. Instead, we hope our actions will,” Robinhood told some clients in an email Monday.

Robinhood says it has strengthened its infrastructure, and is looking to strengthen its relationship with some clients after recent outages.

On Monday, the trading start-up emailed customers who said they were affected by tech glitches that caused them to miss out on a historic market day. A Robinhood spokesperson told CNBC the dollar amount would be determined on a case-by-case basis. 

“We’d like to start with the apology you deserve: We’re sorry for the recent outage on our platform. Your support is what helps us democratize finance for all, and we know we owe it to you to do better,” the company said in an email to some Robinhood users. “An apology alone won’t rebuild your trust in us. Instead, we hope our actions will.”

The trading app said it was experiencing technical issues that kept it offline for nearly two full trading days earlier in March. As a result, Robinhood clients missed out on the biggest one-day point gain in the Dow Jones Industrial Average in history. 

Robinhood was valued at $7.6 billion after a its latest funding round last year led by DST Global. Venture capital firms like New Enterprise Associates, Sequoia and Ribbit Capital are also investors. The start-up has ushered in 10 million — mostly millennial — traders by offering free equity, options and cryptocurrency trading. 

Robinhood’s co-CEOs outlined the issues in an earlier blog post, saying it was due to “historic market conditions,” as well as record trading volume and account sign-ups — all of which caused “stress” on the company’s infrastructure. But they stopped short of apologizing in their last update. 

The company said it has since improved its infrastructure and some of the core issues that caused the March outages. That included capacity of an internal messaging system, which came under stress and contributed to the outage. 

“Our engineering team has further strengthened and stabilized our systems and is continuing to work to minimize the risk of an outage like this from happening again,” the company said in the email Monday.

The outages did not go over well on social media. Many threatened on Twitter to pull their funds from the platform and multiple threatened to sue. One Robinhood client based in Sarasota Florida filed a federal lawsuit on behalf of himself and other traders. The plaintiff, Travis Taaffe, alleges that Robinhood was negligent and breached its contract by failing to “provide a functioning platform,” leaving traders unable to move money while stock markets surged. 

Despite the controversy, Robinhood told CNBC March has been a historic month for trading volume and net deposits.

Average daily trading volume was three times what it was in the same quarter last year, according to a Robinhood spokesperson. The 10 times increase in net deposits in March so far are compared to the monthly average in the fourth quarter.

The company would not comment on how many total users it now has, or total assets under management. 

Source: https://www.cnbc.com/2020/03/23/robinhood-offers-credits-to-customers-after-trading-outage.html

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