Charlie Munger calls Robinhood a gambling hall ‘

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Charlie Munger, vice chairman of Berkshire Hathaway and longtime business partner of Warren Buffetts, called the Robinhood commission-free trading app “in contempt” in a new interview.

“It’s a gambling hall masquerading as a respectable business,” the 97-year-old investor told CNBC on Tuesday evening. “And that tells people that they don’t pay commissions when commissions are just disguised in trading.”

“It’s basically a shady and unsavory operation. And what’s interesting about it is that some good people that you would be happy to have in your family supported it,” he added. .

Robinhood critics accused the company of gamifying the investment. But the app has also made trading more accessible to younger people and those with less cash on hand by eliminating commission fees.

Instead, she and other online brokerage firms rely on a practice called Pay for Order Flow as a profit engine. The practice, although common, has often been criticized for its lack of transparency.

Market makers, such as Citadel Securities, pay Robinhood and other online brokers for the right to execute client trades. The broker then collects a small fee for the shares routed, which can run into the millions when clients are actively trading.

Warren Buffet also targeted the app during the CNBC segment.

Buffett added in the interview published Tuesday that Robinhood does not encourage its users to hold investments for long periods of time.

“It doesn’t encourage people to buy an index fund at a very, very, very low cost and hold it for 50 years. I’ll guarantee you won’t go in there, get that advice, ”Buffett said.

This isn’t the first time Buffett has targeted Robinhood.

He said last month at the Berkshire Hathaways annual meeting that the app has become a very important part of the casino side of the casino group, which has joined the stock market in the last year or a year. and half.

He added that there is nothing illegal about it, nothing immoral, but I don’t think you are building a society around people who do.

Robinhood and other online brokerage firms rely on a practice called Pay for Order Flow as a profit engine. SOPA Images / LightRocket via Getty Images

When contacted for comment, Robinhood directed The Post to a May blog post responding to Buffett and Munger’s comments made last month.

“If the last year has taught us anything, it’s that people are fed up with the Warren Buffett and Charlie Mungers of the world acting like they’re the only oracles of investing,” wrote Jacqueline Ortiz Ramsay , spokesperson for Robinhood. “And at Robinhood, we weren’t going to sit idly by while they disparaged ordinary people for taking control of their financial lives.”

Robinhood, which is planning an IPO later this year, landed in the sights of regulators earlier this year when the app helped fuel a GameStop stock market frenzy that saw the stock climb nearly 400% to at some point.

At a congressional hearing in February, lawmakers pressed Robinhood CEO Vlad Tenev over the company’s relationship with market makers and its use of payment for order flow. A handful of lawmakers also alleged Robinhood was playing the stock market.

In a lawsuit in December, Massachusetts Secretary of State Bill Galvin said Robinhood used aggressive tactics to attract inexperienced investors. He accused the app of using strategies that treated trading like a game to attract young inexperienced clients, including raining confetti for every trade made on its app, a practice the app abandoned in March.

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