Robinhood Has a Glitch That Gives Traders ‘Infinite Leverage’

A glitch in the Robinhood Markets Inc. system is allowing users to trade stocks with excess borrowed funds, giving them access to what amounts to free money.

Dubbed the “infinite money cheat code” by users of Reddit Inc.’s WallStreetBets forum, the bug is being exploited, according to users on the forum. One trader bragged about a $1 million position funded by a $4,000 deposit.

Robinhood is “aware of the isolated situations and communicating directly with customers,” spokesperson Lavinia Chirico said in an email response to questions.

The Menlo Park, California-based money-management software designer touts trading “free from ...