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Analysis: Robinhood protected from lawsuits by user agreement, Congress

reuters.com

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Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#21

Post by hehehaha »

ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

To be honest, people will eventually return. RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel. In aggregate, total savings they pass down to retail traders is in the billions. With options trading at all time high, savings for 2020 was likely in tens of billions.

Edit: upon looking at some aggregate data via OCC, appears I overestimated savings.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#22

Post by skizm »

ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

They would have gone out of business if they did not restrict trading and GME went back down to the 20-40 USD range though.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#23

Post by Alex3917 »

gruez wrote: post #15
mdorazio wrote: post #5

"It will be hard to prove users suffered as a result of Robinhood’s measures because GameStop and other stocks covered by the curbs fell sharply on Thursday after the restrictions were announced, said James Cox, a professor at Duke Law School." Wait, what? Can anyone legitimately make the claim that the massive drop in value that cut off the price rise at the knees and allowed the worst short positions to cover their…

Probably because those are theoretical losses. The previous paragraph is also relevant: >However, Robinhood is not legally bound to carry out every trade and the lawsuits will not succeed without evidence the company restricted trading for an improper reason, such as to favor certain investors, according to several legal experts. As mentioned in other threads, robinhood wasn't able to come up with the deposit needed…

> As mentioned in other threads, robinhood wasn't able to come up with the deposit needed for their customers trades.

That's not true, they only blocked trades on those specific stocks. If it was really a liquidity issue then they could have rate limited all trades equally regardless of the stock in question.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#24

Post by lucasyvas »

andrewflnr wrote: post #19

Who is trying to sue Reddit for this? Bringing them up just sounds like building a case for repealing Section 230 of the DMCA, which would be a disaster but nevertheless seems to have bipartisan support.

I'm all for it at this point - it will push to decentralized infrastructure, which the Internet was meant to be in the first place.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#25

Post by vertis »

ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

I don't have a Robinhood account, and I'm not involved in the GME/WSB stuff, but I would think twice about opening a Robinhood account now.

Indeed, it's been educational about which brokers are using other clearing houses (sorry if I get the terminology wrong), and which are direct.

But then badly behaved businesses like Godaddy don't seem to suffer or go out of business, so I suspect Robinhood won't have too many long term problems.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#27

Post by gruez »

vertis wrote: post #25
ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

I don't have a Robinhood account, and I'm not involved in the GME/WSB stuff, but I would think twice about opening a Robinhood account now. Indeed, it's been educational about which brokers are using other clearing houses (sorry if I get the terminology wrong), and which are direct. But then badly behaved businesses like Godaddy don't seem to suffer or go out of business, so I suspect Robinhood won't have too many lo…

>Indeed, it's been educational about which brokers are using other clearing houses (sorry if I get the terminology wrong), and which are direct.

Wait what? Is there a list somewhere? AFAIK interactive brokers (which doesn't engage in PFOF) also shut down trading.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#28

Post by relaunched »

Robinhood would be liable for any margin accounts that were unable to settle their balances by the end of the allotted term. It's very reasonable that they restricted trades based on their liability.

Did it have the deleterious affect of negatively impacting anyone long on the stock, probably. But, was that the primary rationale? It'll have to come out in discovery.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#29

Post by endisneigh »

hehehaha wrote: post #21
ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

To be honest, people will eventually return. RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel. In aggregate, total savings they pass down to retail traders is in the billions. With options trading at all time high, savings for 2020 was likely in tens of billions. Edit: upon looking at some aggregate data via OCC, appears I overestimated savings.

I don’t use Robinhood so forgive my ignorance, but what savings are you referring to?

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#30

Post by why_Mr_Anderson »

In Europe, mandatory arbitration are usually unlawful. European Union Council Directive 93/13 on Unfair Terms in Consumer Contracts creates a rebuttable presumption that pre-dispute arbitration clauses in consumer contracts are invalid. The reason is the unequal bargaining power between the contracting parties in consumer contracts.
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