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Browing the top of reddit right now is really reminiscent of /r/The_Donald, particularly the shift from a bunch of 'ironic' jokers to conspiracy theories and shouty chest beating and calls for upvotes. I'd treat anything like this with a huge pinch of salt.
This feels like RH is going to go under if they don’t make this move? Are they holding a lot of risk by not doing this or something? And what repercussions would they face, surely they’ve flagged that risk and are doing it anyway.
ed. yes, on the chance that this wasn't just a margin call
Robinhood's behavior here is wicked and wrong. Yes, Robinhood's EULA technically allows them to do this wicked thing. The same EULA says that Robinhood can't be sued over it or anything else. It's about time we talk about how it's not in the public's interest to allow companies to put arbitrarily user-hostile terms in their user agreements.
As i say elsewhere - this margin call was FORCED by RH because they blocked users ability to buy shares as Citadel + others were ladder short selling to artificially lower the stock price of GME, forcing the margin call.
This is horrific, criminal, and should be prosecuted.
Ultimately, they know that their SEC Fine will be less than the $50B+ in losses they face from their irresponsible naked short selling.
Did we learn nothing in 2008? Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world?
Robinhood's behavior here is wicked and wrong. Yes, Robinhood's EULA technically allows them to do this wicked thing. The same EULA says that Robinhood can't be sued over it or anything else. It's about time we talk about how it's not in the public's interest to allow companies to put arbitrarily user-hostile terms in their user agreements.
This feels like RH is going to go under if they don’t make this move? Are they holding a lot of risk by not doing this or something? And what repercussions would they face, surely they’ve flagged that risk and are doing it anyway.
Nothing worth worrying about. Every single case in the financial sector over the past two decades has resulted in fines that are a fraction of the profits. I mean, you had banks laundering money for cartels, Malasians were looted, etc etc... every single time they fine the culprits a tiny fraction of their profits.
The US has made criminal activity profitable, even if you get caught.
So Citadel and RH probably just made the smart move. Screw the rules, because the punishment for breaking them will be more than worth it.
For anyone saying, "Most likely trading on margin" Remember: This morning Robinhood conspired with Citadel to halt trading amid a short ladder sell to drive the price lower, allowing shorts to cover their losses with no competition. This is blatant market manipulation and anti competitive behavior, and must be stopped. Why does everyone insist on protecting billionaires who insist on playing the game with a different…
OK, but they are almost certainly also trading on margin right? You trade with robinhood's money, then they can decide not to lend it to you anymore for nearly any reason they want. ¯\_(ツ)_/¯
You have to admit, though - that is disingenuous. Those plays were profitable, no need to call them (unless there has been irresponsible behavior on the behalf of the broker)
Earlier quoted context omitted.
Where does tat say "to protect you from yourself"? Reads to me a lot more as "since brokering your position is an unreasonable risk to us, we stop doing so" (and the right to do so is likely lined out in their ToS)
Could you expand on what the risk to Robinhood is here? From what I understand, users purchased stock for money. What is Robinhood holding here that can create risk for them?
This feels like RH is going to go under if they don’t make this move? Are they holding a lot of risk by not doing this or something? And what repercussions would they face, surely they’ve flagged that risk and are doing it anyway.
> And what repercussions would they face Nothing worth worrying about. Every single case in the financial sector over the past two decades has resulted in fines that are a fraction of the profits. I mean, you had banks laundering money for cartels, Malasians were looted, etc etc... every single time they fine the culprits a tiny fraction of their profits. The US has made criminal activity profitable, even if you get…
Pretty sad to see most of HN willfully ignoring this fact and jumping to the defense of Hedge Funds and the billionaire class.