Robinhood will likely not, considering they are grossly non-compliant with Regulation T (and have been reported to the SEC and FINRA regarding this issue), which governs margin requirements. This is someone's risk management system failing on a trivial use case.
I agree that they are unlikely to go after them, but I think if you read the fine print of the margin product, the customer agrees that the borrowed money is a debt and must be repaid. Also RH could argue that the customer acted in bad faith, being fully cognizant that what they were doing was against the rules.
Robinhood extended margin it was not legally permitted to extend (Reg T is federal statute, btw). I am very interested in sitting in any court room as an observer where their counsel attempts to collect.
But they didn’t intend to, right? If I steal money from a broker’s desk drawer and use it to do dumb futures trades, surelt that’s not a regulatory violation on the broker’s part.
Great case to make that you are so incompetent as a broker-dealer that someone was able to extend themselves 250x leverage on the margin you extended. That's how you lose your broker-dealer license, which means your business dies if you're Robinhood (unless they're only going to offer a cash management account, which I guess might be a thing? even Credit Karma and Personal Capital are offering one now). As a broker, risk management is your job.
