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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

#171

Post by okprod »

mikestew wrote: post #98

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 igno…

I think a lot of retail traders didn't read the ToS but also with this situation the notice about automatic liquidating doesn't reference margin.

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

#172

Post by ineedasername »

I've seen people say this is all part of a move by big finance to protect entrenched interests.

I'm cynical enough to entertain that possibility, but what really would be the leverage/pressure they could put on Robinhood to accede to this? Presumably these moves will hurt Robinhood with their users and possibly introduce legal liability.

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

#173

Post by southeastern »

woah wrote: post #133

The idiotic takes on this GME situation are beyond belief. What did people think was going to happen? GME goes to a million and everyone becomes a millionaire?

I don't know where you got this-- I saw a lot of people who were investing not even for a profit but simply 'to be a part of a movement'. Yes I'm sure there are plenty of naive fools in the mix, it still is the stock market after all. But the complaint here isn't that a bunch of misinformed people thought they'd be millionaires-- it's that a bunch of people made a conscious decision to invest and now brokerages are manipulating the markets. Ironically some of them justify it as being BECAUSE 'retail investors don't know what they're doing'. There's a lot of condescension towards retail traders, which is weird when 12 years ago the 'smart' institutional investors and hedge funds managed to crash the global economy. Looking at the whole picture, I don't see why it's so ridiculous that people get a piece of the action when the majority are acknowledging they might not make any money at all on this

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

#174

Post by eterm »

ineedasername wrote: post #150

we placed it to mitigate the risk on your account Wow, that's pretty awful since liquidating the position may actually put the user at a net loss, which wouldn't avoid risk: It would actually "instantiate" the potential risk of having to sell the stock after falling below the purchase price. Why not give users the opportunity to provide more collateral for their margin?

A realised loss is not a risk though. A position where there is margin and could be an even bigger loss is a risk.

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

#175

Post by ivalm »

mikestew wrote: post #141
simonsaidit wrote: post #108

Earlier quoted context omitted.

The difference here is they prevented people from starting new positions while still allowing closing them .. effectivly being the cause of the drop.

You think a lack of volume from retail traders on Robinhood is the cause of the drop? To put it mildly, that's a little naive.

I’m pretty sure all of the GME bubble is driven by retail, and since most retails prevented new buy orders then yeah, it affected the price action. Remember, GME is small.

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

#176

Post by Jommi »

gnud wrote: post #155
tw04 wrote: post #139

Earlier quoted context omitted.

>When I bought my house, the attorneys sat down with me and had me read through and explained to me every single term of the purchase agreement and my mortgage, checking that I understood them. Absolutely no one has done this for Facebook, throwing a few hundred into Robinhood, etc. It's not worth it, and the terms change with such frequency that it would be outdated immediately. I still have my binder from my closin…

Really? I _know_ I read everything, both for my loan and for the purchase, when I bought my apartment. It wasn't really that much. It took a few hours. I didn't read every law that the contract referred to, but I read the contract itself. Is a house really that much worse when it comes to paperwork? Or is the US just that much worse with this stuff?

X Hours = xh$ with probability you misunderstood something

Compared to paying lawyer to explain it to you in let's say 1/10 of the time and better understanding

X/10h$ + lawyer fees

Compared to not reading and just trusting

No upfront cost, but probability of bad outcomes increases.

I think when buying a house that makes sense.

Buying 100$ worth stock? Not sure. 10k worth? Hmmm maybe

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

#177

Post by MrPatan »

AnHonestComment wrote: post #111
thebean11 wrote: post #101

This is probably legit, unlike delisting it. You are taking a loan from them with the understanding that they can (in some circumstances) liquidate your investment to lower their own risk. This absolutely seems like one of those circumstances.

A margin call on a stock you halted trading in smells like fraud. It’s like the bank banning selling your home then repossessing it when the value falls. Crooked entirely.

Not exactly. It would be as if the bank that mortgaged your house then prevented people from buying it, then turned around to you and said "See? Nobody wants it! You need to lower the price. Oh! What's this? The price has gone down, I need to reposses it. Thanks, come again!

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

#178

Post by llampx »

dingaling wrote: post #166
short_sells_poo wrote: post #75

Earlier quoted context omitted.

If you have a margin account, the broker calculates a risk based margin and can close any position they wish if they deem it a risk. They don't have to give you any justification. With increased buying power comes increased risk. In some sense this was basically inevitable. Robinhood allowed (perhaps even encouraged) a huge mass of clueless investors to flood into the market. As long as the going was good, nobody com…

Maybe it's a good time to stop calling them investors and instead call them speculators. They're not investing in anything, their money doesn't contribute to any form of progress.

Welcome to the stock market

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

#179

Post by dang »

captainarab wrote: post #60
markdown wrote: post #56

Earlier quoted context omitted.

> 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…

100% agree. Pretty sad to see most of HN willfully ignoring this fact and jumping to the defense of Hedge Funds and the billionaire class.

That's an inaccurate characterization, as anyone reading these threads can easily see.

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

#180

Post by bondarchuk »

Commenters saying that this is understandable and simply how margin trading works might be missing this part of the story:

https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

>We also raised margin requirements for certain securities.

Is that how margin trading always works? The broker can just without prior notification increase your collateral requirement and liquidate you instantly?

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