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Markkula Center for Applied Ethics

The Best of Intentions: The Tale of Robinhood

Robinhood brand logo on NASDAQ building signage

Robinhood brand logo on NASDAQ building signage

Sarah Cabral, Amy LaCombe, Ann Skeet

Mark Lennihan/Associated Press

Sarah Cabral is a teaching and research fellow in the Carroll School of Management at Boston College. Amy LaCombe is associate dean for undergraduate curriculum in the Carroll School’s undergraduate program. Ann Skeet (@leaderethics) is the senior director, leadership ethics, with the Markkula Center for Applied Ethics at Santa Clara University. Views are their own.


Robinhood, a stock trading app, was founded in 2013 by two Stanford roommates who began their careers developing trading software for hedge funds. They realized that while millions of everyday traders were charged fees for trading, the big banks were excluded from this practice. In order to combat this perceived injustice, the founders developed an app that allowed people to trade for a monthly fee, rather than a per-trade fee, thus democratizing the financial markets. However, the road for Robinhood has arguably been anything but smooth and democratizing. They have been in the news several times in the recent past, from their entry into the unregulated cryptocurrency market to being fined nearly seventy million dollars by FINRA for its systemic supervisory failures. Robinhood also made headlines and fell under much scrutiny for halting trading of GameStop stock in January of 2021, which is the focus of our attached case. As we have seen with other well-known companies like Facebook and Google, even when the original intentions of business builders are justice-oriented, problems can occur when executives do not build out systems across the company to keep those intentions at the forefront of decision making.

A Jesuit Analysis

The attached case and discussion questions were written in consideration of the context and experience of students, in order to provide opportunities for reflection, action, and evaluation. This model is referred to within Jesuit education as the Ignatian pedagogical paradigm. In regards to context and experience, we understand this to mean that a Jesuit education takes a learner-centered approach. In deciding to write this case study, we considered what topics and cases might engage our undergraduate business ethics students, by asking, “What are they already interested in?” Of particular interest to our students is the role social media now plays in varying business sectors. We understand reflection as expanding student understanding and guiding students toward the tensions that exist within business activities. This case identifies that there are investors who are betting against companies by short selling stock. This can be risky but the fact that there are investors betting on both possible directions of the stock allows for liquidity in the market and strengthens the market by correcting over inflation. In regards to action, this case will spark a class discussion about whether or not Robinhood should try to make amends for decisions that cost their customers money. Students will be asked to provide concrete ways in which Robinhood might make amends. Finally, a Jesuit education is concerned with social justice and prioritizes the common good. Students must evaluate why this case matters. This case highlights how conflicts of interest may put companies in a position where they have to act in a way that goes against their stated mission and culture. Robinhood was founded to “democratize” the stock market, but when it halted trading, it did not allow its individual investors to purchase shares of GameStop stock. As educators preparing our students to make ethical decisions, it is important to have these discussions early on as evidence shows that “scripting” or anticipating difficult situations can be a powerful tool to prevent both individuals and companies from compromising their values.

For business leaders, this case is an object lesson in the costs of unintended consequences. How much responsibility should Robinhood have for making it easier for less experienced investors to take on risks they may not understand? What practices might leaders have drawn on to result in a more ethical outcome, one in which all of Robinhood’s stakeholders flourish?

Ignited Global

The Markkula Center for Applied Ethics does its work from a front-row seat in the hotbed of global innovation. We are fortunate to work alongside colleagues throughout the Jesuit network of universities worldwide, such as the authors of this case, who bring to bear time-tested Ignatian values-based learning models to modern dilemmas. In addition to cases available on the Markkula Center website, educators can find detailed teaching notes at the Jesuit Business Case site, a global community of scholars changing the world through better business education.

Access the case study.

Dec 1, 2021

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