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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

#251

Post by detaro »

leesalminen wrote: post #33
detaro wrote: post #27

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?

I was primarily commenting on the framing. The RH message never pretends it isn't acting in RHs interest, so the representing it as a "we knows what best for you" doesn't make sense.

I don't know if it's only about shares on margin or how the process exactly works behind to judge if there actually is a threat to RH or not.

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

#252

Post by elihu »

amluto wrote: post #188
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…

This isn't some little detail hidden in the TOS. This is what a margin account is . If you do not have your required maintenance margin (and that may be a complicated calculation), the broker can and will sell things for you to protect themselves. This is, frankly, common sense. If you deposit $100, buy $300 of stock, and that stock falls below $200, your account's equity will go below zero and your broker is in trou…

Are all of the forced GME sales in the situation you describe? (Not a rhetorical question, I'm actually wondering if it's the case.)

Let's say your scenario is a little different: you deposit $100, buy $300 of stock, and the stock goes up to $600, then drops to $400. Then the broker sells your shares at $400 to "protect themselves". If that's what's going on here, that seems wrong. On the other hand, if it's as you describe that seems reasonable.

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

#253

Post by rasz »

eterm wrote: post #7

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.

Movements like /r/The_Donald ended up with attempted insurrection, dead people, guns and pipe bombs confiscated. Are you suggesting we might have another one coming, this time directed at the Hedge fund managers?

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

#254

Post by toolz »

stickfigure wrote: post #218
toolz wrote: post #145

Earlier quoted context omitted.

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?

No, it's not going to pop no matter what, that's not how the market works - and presumably most everybody cares how it happens. Most people aren't big on artificial market manipulation.

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

#255

Post by snowwrestler »

ptd wrote: post #244
paxys wrote: post #232

Earlier quoted context omitted.

One of the top posts on WSB this morning was a supposed Robinhood engineer who overheard a call between their CEO and the White House instructing them to stop trading $GME. The /r/The_Donald comparisons seem apt at this point.

Justin Kan, founder of Twitch and Atrium(net worth over 9 figures) tweeted that he got a tip that Citadel(the company that executes trades for Robin Hood) reloaded their shorts before they told Robinhood to stop allowing users to buy GME. If you think Kan is a conspiracy theorist making baseless accusations, we see the world very differently. Which is fine. Diversity of thought is always welcomed in my opinion. But I…

I would believe Justin got that tip but that does not mean it was true.

It doesn't even make a lot of sense as the part of Citadel that executes trades cannot talk to the part of Citadel that takes short positions, and vice versa.

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

#256

Post by weird-eye-issue »

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?

First of all, it does reduce risk because it avoids further downside. Just because a stock can come back up doesn't mean it didn't lose real value even before realizing the loss.

Second, this is not about the individual's risk of losing money. This is about Robinhood losing money because they lent him money.

And about why they didn't give him a chance to provide further collateral is simply because there wasn't enough time. I watched the stock drop from over $400 to $125 in just over an hour. Not sure what you could expect Robinhood to do in that situation.

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

#257

Post by jsjohnst »

ptd wrote: post #244
paxys wrote: post #232

Earlier quoted context omitted.

One of the top posts on WSB this morning was a supposed Robinhood engineer who overheard a call between their CEO and the White House instructing them to stop trading $GME. The /r/The_Donald comparisons seem apt at this point.

Justin Kan, founder of Twitch and Atrium(net worth over 9 figures) tweeted that he got a tip that Citadel(the company that executes trades for Robin Hood) reloaded their shorts before they told Robinhood to stop allowing users to buy GME. If you think Kan is a conspiracy theorist making baseless accusations, we see the world very differently. Which is fine. Diversity of thought is always welcomed in my opinion. But I…

> Justin Kan, founder of Twitch and Atrium(net worth over 9 figures) tweeted that he got a tip that Citadel

So rich people are never lied to by people they trust? I get it, you trust him, but thinking just because he “has a source” saying it doesn’t automatically makes it factually correct. Maybe it is, but appeals to authority and essentially calling anyone who disbelieves crazy doesn’t compute for me.

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

#258

Post by ianai »

MrPatan wrote: post #177
AnHonestComment wrote: post #111

Earlier quoted context omitted.

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!

But for the part where the current valuation was widely viewed as much too high. It does smell bad. I agree with how you framed it. I’m really grateful you wrote it that way as it makes it very clear how this feels deeply corrupt. I suspect this is a corner case which could bankrupt a broker though.

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

#259

Post by MuffinFlavored »

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.

Did anybody confirm whether Robinhood was automatically initiating GME sell orders for those holding not on margin?

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

#260

Post by MuffinFlavored »

ivalm wrote: post #184
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.

It wasn’t rh alone, it’s also most other discount brokerages.

https://www.marketwatch.com/story/gamestop-amc-trading-is-no...

Not just discount brokerages.

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