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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

#211

Post by tibbon »

xzel wrote: post #124
tibbon wrote: post #112

Earlier quoted context omitted.

I honestly didn't read the agreements on Robinhood. Before you call me stupid or irresponsible, I'm going to say practically no one reads these agreements, and even fewer understand them. The NYT a few days ago had an opinion piece on how no one reads the TOS for things like this. A very choice line: > A 2012 Carnegie Mellon study found that the average American would have to devote 76 work days just to read over tec…

TOS on websites aren't the same the agreement to a margin account. Not reading that would be like not reading your mortgage agreement or your auto loan agreement. I agree they're long and confusing but financial agreements are super important to read and if you can't understand it hire a younger/cheaper lawyer for an hour. Every contract I've signed for employment I've hired someone to confirm the law in that state a…

> Every contract I've signed for employment I've hired someone to confirm the law in that state and it really makes a difference knowing what is in there.

That's really cool to be able to do. For the average American, that's pretty much impossible to afford.

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

#212

Post by tibbon »

coding123 wrote: post #127
mbreese wrote: post #116

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 Really? Because that would make closing take forever. I mean, even after the purchase agreement and mortgage terms, there are a ton more documents to go through.

I'm guessing it was the mobile notary he might have thought was an attorney.

No, this was my title attorney. Want his card?

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

#213

Post by eloff »

tibbon wrote: post #112
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 honestly didn't read the agreements on Robinhood. Before you call me stupid or irresponsible, I'm going to say practically no one reads these agreements, and even fewer understand them. The NYT a few days ago had an opinion piece on how no one reads the TOS for things like this. A very choice line: > A 2012 Carnegie Mellon study found that the average American would have to devote 76 work days just to read over tec…

There is a big difference between a website TOS which is mostly legal ass covering and a loan agreement with is what margin is.

If you take a loan and didn't check the interest rates, term, and basic conditions, that's on you.

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

#214

Post by freeflight »

josho wrote: post #190
freeflight wrote: post #162

Earlier quoted context omitted.

> I'm going to say practically no one reads these agreements, and even fewer understand them. This might be true for the myriad of free online services and applications most people use on the daily. But with anything I plan to spend or invest my money in/give my real personal information to I will most certainly take care to properly read and understand what I'm agreeing to there. In that context, comparing your mort…

> I will most certainly take care to properly read and understand And when you don't understand the dense legalese how did you get clarification? Did you pay a few hundred dollars to have a lawyer review the contract and explain it to you? Perhaps call the company up to have a minimum wage call center employee explain it to you? Or just come up with an interpretation of the text that seems to make sense and conclude…

> And when you don't understand the dense legalese how did you get clarification?

By asking people knowledgeable in the field I trust, if it's big and relevant enough I might even invest in a lawyer, but at the very least I will put effort into trying to understand it.

If that doesn't work then I will be way more skeptical of whatever I'm supposed to agree to because anything written to be purposefully vague, and difficult to understand, does not entail a lot of trust nor confidence in me.

But not understanding, and making no efforts on your end to understand, is a very poor defense for entering anything legally binding: Making sure you understand is ultimately up to you and only you because at the end of the day it will be your ass and your assets on the line.

Which is a mindset even shared by WSB: That submission is full of regulars reiterating how people have been told not to buy GME on margin exactly because of what ended up happening.

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

#215

Post by jsjohnst »

okprod wrote: post #76
avree wrote: post #13

He was margin called. This is literally how margin works, has nothing to do with GME or the Robinhood furor.

The screenshots I've seen aren't due to margin calls, also not end of day yet

There is no “end of day” only requirement on margin calls. A brokerage firm could margin call you 2min after the market opened, as an example. The trigger is when your account is out of balance with the established risks the brokerage is willing to extend to you, which they can change the criteria at will.

More details on margin calls here:

https://www.thebalance.com/what-is-margin-call-358106

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

#216

Post by FabHK »

cwkoss wrote: post #199
avree wrote: post #13

He was margin called. This is literally how margin works, has nothing to do with GME or the Robinhood furor.

The fact that this margin call happened at the bottom, but this user likely could not have closed their position themselves 15 minutes earlier at a better price, seems like it should be illegal if it is not already.

If you're long on margin, the position will of course be closed when the stock price drops (and the value of the position (= stock price * number of stocks minus margin loan) approaches zero), not when it rises.

And it was impossible on RH and other brokers to buy more shares, selling (liquidating a long position) was always possible, AFAIK.

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

#217

Post by notJim »

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.

AFAIK you could always sell the stock, just not buy it.

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

#218

Post by stickfigure »

toolz wrote: post #145
stickfigure wrote: post #113

Earlier quoted context omitted.

> cause of the drop Not sure I understand this perspective. GME was a balloon floating around in a needle shop.

You don't understand how disallowing people to buy into a stock causes the price to drop, or you disagree that disallowing the purchase of a stock causes the price to drop? From my perspective it seems rather straight forward that if you artificially limit demand and not supply, you'll almost always see price drop.

It's going to pop no matter what actions RH (or anyone else takes). Who cares which needle pops it?

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

#219

Post by ed25519FUUU »

runako wrote: post #132

Obviously, margin calls are legitimate. But Robin Hood obviously played an important role in the price direction that led to the margin calls. I honestly don't know how anyone could trust RH as a neutral party after this.

What brokerages hit you with a margin call when you're UP on a stock? Margin calls are for when you fall BELOW a certain liquidity event.

His shares are for $118.93. He's up over 60%.

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

#220

Post by Animats »

cwkoss wrote: post #197
thebean11 wrote: post #125

Earlier quoted context omitted.

> It’s like the bank banning selling your home then repossessing it when the value falls. Apples and oranges. If you bought a house on margin, the way a brokerage defines margin, they would absolutely be allowed to do that. Margin and mortgage are fundamentally different types of loans. I agree that halting buys was absolutely wrong. Definitely see where you're coming from, if you look at the two actions together..it…

Isn't buying a house on margin... basically just a normal mortgage?

You don't get a margin call if your house or car is underwater. You can just keep making the payments until you own it.
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