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Robinhood is automatically initiating GME sell orders on users' behalf

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Re: Robinhood is automatically initiating GME sell orders on users' behalf

#91

Post by captainarab »

short_sells_poo wrote: post #85
captainarab wrote: post #57

Earlier quoted context omitted.

Sure, no argument from me on here. 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)

That is entirely up to the broker. They make no guarantees to you that they'll underwrite your risk taking with no limits. If you don't want this to happen, go to a reputable broker and make sure you are not trading on margin. This is not rocket science, but does require a basic level of understanding.

I agree that this is the technically correct definition of how margin is typically utilized, and that investors should be prepared for this in the case of high volatility.

The fact does remain, though, that the way the data is presenting itself seems to indicate that there was disingenuous behavior on the behalf of market makers and a number of hedge funds. To be seen, I guess.

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#92

Post by adventured »

quotemstr wrote: post #72
captainarab wrote: post #54

This is blatant anti-competitive behavior on the part of Robinhood and Citadel. 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 $…

> Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world? Well yeah. Why would you expect anything else? And if anyone complains about it, the complaints will get scrubbed off the internet. And if you go to private messengers to complain, your session keys will get escrowed because "terrorism" or "misinformation" or something and you'll be banned. Keep in min…

It won't be long before the Biden Administration is declaring members from WallStreetBets to be domestic terrorists acting in concert to attack the US financial system (it'll be part of the broader War on Domestic Terrorism program that they've begun). The powers that be in DC and on Wall Street will never allow this kind of action to go unchecked indefinitely.

They'll probably make it a crime to organize large groups of individuals to herd buy/short a stock.

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#93

Post by tmaly »

captainarab wrote: post #54

This is blatant anti-competitive behavior on the part of Robinhood and Citadel. 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 $…

https://www.reddit.com/r/occupywallstreet/

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#94

Post by leesalminen »

AngryData wrote: post #83
leesalminen wrote: post #33

Earlier quoted context omitted.

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?

The company that owns Robinhood is the same company that was shorting all the GME stocks.

Right, I’m aware. I don’t think that’s a valid defense for what RH did today and was curious to hear if others thought there was a valid defense. If RH is just calling in open margin orders, then that’s just the game. If RH is selling outright owned securities, that’s wrong.

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#95

Post by miloignis »

hartator wrote: post #69
captainarab wrote: post #54

This is blatant anti-competitive behavior on the part of Robinhood and Citadel. 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 $…

> Did we learn nothing in 2008? Yep, that we are going to have to pay their losses.

Something else we learned from 2008 is that the government and taxpayers made money on the bailout because it was paid back with interest, see sources like: https://projects.propublica.org/bailout/

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#96

Post by quotemstr »

adventured wrote: post #92
quotemstr wrote: post #72

Earlier quoted context omitted.

> Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world? Well yeah. Why would you expect anything else? And if anyone complains about it, the complaints will get scrubbed off the internet. And if you go to private messengers to complain, your session keys will get escrowed because "terrorism" or "misinformation" or something and you'll be banned. Keep in min…

It won't be long before the Biden Administration is declaring members from WallStreetBets to be domestic terrorists acting in concert to attack the US financial system (it'll be part of the broader War on Domestic Terrorism program that they've begun). The powers that be in DC and on Wall Street will never allow this kind of action to go unchecked indefinitely. They'll probably make it a crime to organize large group…

> They'll probably make it a crime to organize large groups of individuals to herd buy/short a stock.

You'd better believe that something will be done to ensure that the rabble can't insult their betters like this ever again.

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#97

Post by jrochkind1 »

hartator wrote: post #77
jrochkind1 wrote: post #43

Earlier quoted context omitted.

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 trade with robinhood's money, then they can decide not to lend it to you anymore for nearly any reason they want. Can they? I thought margin calls were you personal debt. It's like the bank deciding to sell your house that you have mortgage on because they think the market is too volatile. Makes little senes.

> One of the most important things to understand about margin calls is that your brokerage firm has discretion as to when you are required to increase the equity in your margin account. Some firms will attempt to contact you to tell you additional equity is required, but they're not obligated to do so. Whether or not your firm has contacted you, they can take immediate action to increase the equity in your account if they decide the equity is too low and is not in line with the risk of your account. This means they can immediately sell out whichever securities they choose, regardless of the financial and tax obligations for you.

https://www.fidelity.com/learning-center/trading-investing/t...

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#98

Post by mikestew »

Yeah, brokerages will do that if the stock takes a big drop like it did today. Oh, did you not read that part of your margin agreement? According to thread, some are just now getting to that part. Those same folks shouldn't have been trading GME on margin.

If it's any consolation, I've had Fidelity, IB, et. al., do the exact same thing when a trade turned sour. Difference is, I didn't run to Reddit to display my ignorance to the world.

Re: Robinhood is automatically initiating GME sell orders on users' behalf

#99

Post by avree »

sjs382 wrote: post #89
robot1 wrote: post #21

This is ONLY if you enable margin trading via Robinhood Gold - they increased their margin requirements recently on GME and this will not happen to you if you are trading on cash.

It's not just Robinhood Gold. All accounts are "Robinhood Instant" by default. You need to permanently opt-out of Robinhood Instant (or wait for deposits/trades to settle) to opt-out. Edit: to add a link. This info is fairly well buried: https://robinhood.com/us/en/support/articles/robinhood-accou...

Yes, but "Robinhood Instant" is limited to a subset of the funds you are depositing. It is set up as a margin account to allow them to trade on your behalf before the money hits your Robinhood account. But the money will be hitting, so you will have cash to cover the trade. It's not the same as actual margin trading (where, for example, in this case, the user did not have cash to cover and so his position was liquidated by the broker.)
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