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Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

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Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#671

Post by [deleted] »

vergessenmir wrote: post #365
zarkov99 wrote: post #57

Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a…

This is so true. It's all connected. It's probable that Reddit, Discord, RobinHood have all received calls to disrupt retail traders from political players or financial backers. There's no evidence of this, the truth is we'll never know, but how its most obvious reason. If only RobinHood would live up to its namesake. It is alarming that "soft" circuit breakers are being used to target retail traders on exchanges. I…

[deleted]

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#672

Post by neximo64 »

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

Well probably to stop people buying at $500. If at any point it crashes to $100 it's going to make people more upset.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#673

Post by beachwood23 »

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

I don't think this was Robinhood's choice.

Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade.

Citadel, and other trade executors, are refusing to buy shares for retail traders. Coincidentally, Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. And citadel controls trade execution for dozens of firms.

This is definitely illegal. But Citadel is betting that the resulting SEC fines from this illegal manipulation will be less than the loss they would get if they didn't suppress the price.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#674

Post by pacetherace »

sparrc wrote: post #638
JumpCrisscross wrote: post #385

Earlier quoted context omitted.

> Can someone help me understand Robinhood's POV? Robinhood is a margin-lending options-trading broker. If a customer falls down on a trade, it is ultimately liable. If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable. Risk and compliance likely made this call. Also, Robinhood makes its revenue from market makers. They are the c…

> If a customer falls down on a trade, it is ultimately liable.... Robinhood induced them to buy through its gameified interface Why would robinhood be any more liable than other online traders like Fidelity or etrade? > What I can guarantee is nobody shorting GameStop got Robinhood to pull the plug. How can you guarantee that? Robinhood likely routes most of it's trades through citadel, which has informed partners i…

Every brokerage house has this problem. If their client goes bankrupt, then the brokerage house has to eat the loss.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#675

Post by jacquesm »

subsubzero wrote: post #647

I called out Robinhood months ago in this old thread: https://news.ycombinator.com/item?id=24188407 basically its a shitty company that sells your orders so hedgefunds (citadel etc.) can then buy the same stocks at a lower price[1] and you always end up paying more, they were fined 65M for doing this see here[1]. A total scam and hopefully congress and the SEC come down hard on this company. [1] - https://modernconse…

Robinhood -> best picked name ever.

Steal from the poor, give to the rich :)

And all the while the poor where believing it was the other way around.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#676

Post by MrMan »

janmo wrote: post #29

Many brokers have lent the shares to hedge funds that went short on the stock. Now these hedge funds are on the verge of bankruptcy. If they default the brokers are in a lot of trouble.

yeah counter-party risk can verge into systemic risk, none of these moves by brokers are surprising

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#677

Post by zucker42 »

MuffinFlavored wrote: post #628
zarkov99 wrote: post #57

Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a…

Everybody screaming "class action lawsuit" is lying to themselves. I'm pretty confident this is totally within Robinhood's rights according to their terms and conditions (that everybody with an account agreed to).

Robinhood isn't only limited by its terms and conditions; there are also laws it has to comply with.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#678

Post by beagle3 »

simias wrote: post #575
zarkov99 wrote: post #57

Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a…

While what you say is plausible, can't it also simply be that they saw a gigantic portion of their userbase making these incredibly risky bets and they were worried that it'd end up blowing in their face?

A broker is nit your friend who refuses to buy junk food for you because he suspects you’ll be sick.

A broker is yiur fiduciary/agent; their discretion at refusing your order should be limited to well defined circumstances, and I would be surprised if this is one of them.

(I would not be surprised if the EULA lets them do what they want, but I would be surprised if it would actually be found legal in court —- though it will likely take ages to test because it likely contains a binding arbitration clause)

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#680

Post by Ivoirians »

kgwgk wrote: post #631

https://twitter.com/AOC/status/1354833285386543105 "Committee investigators should examine any retail services freezing stock purchases [...] especially those allowing sales, but freezing purchases." Apparently she would prefer that people were blocked from selling their holdings.

Your comment is not a gotcha. She'd clearly prefer that stock trading not be frozen at all. Freezing purchases but not sales is a gift to short sellers because retail investors can only lower the price, which will induce more people to panic sell.
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