Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Analysis: Robinhood protected from lawsuits by user agreement, Congress

reuters.com

Post reply on HN
Print view View original

61–70 of 293 posts

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

#61

Post by didibus »

endisneigh wrote: post #29
hehehaha wrote: post #21

Earlier quoted context omitted.

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?

That trading stocks on it and all of its features are free, no fees and no commission.

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

#62

Post by gruez »

loceng wrote: post #31
gruez wrote: post #15

Earlier quoted context omitted.

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…

Favor certain investors - like the ones shorting? This isn't going to be an obvious clear cut case, and there will be plenty of gaslighting as part of the TENS of billions of $ on the line.

Just because their decision favored another party doesn't mean it was malicious and they would be liable. If at&t had to shut down their network for 2 hours because of a botched firmware update, that would heavily favor the hedge funds (who probably have redundant connections), but that doesn't mean you can go after them for not being able to sell your GME stocks.

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

#63

Post by ummonk »

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…

Their messaging around this has been a total self-own. I don't know whether they're trying to protect their relationship with the DTCC or something else, but Vlad's lack of clarity understandably makes most people blame RobinHood.

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

#64

Post by TuringNYC »

koolba wrote: post #47
hehehaha wrote: post #21

Earlier quoted context omitted.

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.

Don’t Fidelity, E*TRADE, Ameritrade, and just about it everyone else have zero commission trades now?

Not on options

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

#65

Post by wutbrodo »

maest wrote: post #44
vertis wrote: post #25

Earlier quoted context omitted.

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…

This is not the first time RH has gone down during critical moments in the market. Yet their userbase grows and their users come back. They'll be fine.

During the other times, was their the perception that they were screwing their users over due to pressure by large financial institutions? That's a pretty salient difference for their brand.

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

#66

Post by tempsy »

The fact that they’ve not only limited trading in GME but low volatility name like Starbucks to 1 share is ridiculous. If the only outcome out of this is collective realization about issues with Section 230 or forced arbitration that is a positive whether this class action becomes anything or not.

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

#67

Post by fractionalhare »

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…

Do you actually know of a specific firm that kept its short position open through to Thursday? They would have had to survive through Tuesday and Wednesday, which seems unlikely if they were one of the original sub-$10 shorts.

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

#68

Post by gruez »

MattGaiser wrote: post #41
bmitc wrote: post #32

Earlier quoted context omitted.

But there is the possibility that Robinhood was also cutting trading to appease Citadel, who to my understanding, just happened to re-engage their short positions right before Robinhood cut buying to Gamestop stock. If the story about Robinhood running out of money is true, why wouldn't they just ban buying on margin and not all buying? I don't understand that.

Because anyone buying right away after funding an account or selling the same day as buying is buying on margin. Margin is used to make a lot of the "instant" stuff happen. True cash accounts make them difficult to use for the day trading these people like to do. https://finance.zacks.com/tax-rules-use-proceeds-stock-sales... https://www.fidelity.com/learning-center/trading-investing/t...

Also they can't use customer funds to fund the deposit, it has to be out of their pocket.

https://finance.yahoo.com/video/heres-why-robinhood-restrict...

>And we just can't afford-- well, we're not a clearing firm, but our clearing firm simply cannot afford the cost to settle those trades. We cannot use customer funds to front that cost due to regulation. So the brokerages or the clearing firms have to go into their own pockets to do it.

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

#69

Post by Daho0n »

newacct583 wrote: post #54
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…

> 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 losses sub-$200 didn't materially harm the users? Yes, because you'd have to prove that Robinhood volume alone caused that drop in price. Robinhood isn't that big, and GME volume was crazy on Thursday. It's equally likely (and equally impossible to prove…

Let's see in a few months if it were the peak. I doubt that very much and my money is on it.

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

#70

Post by ummonk »

jcranmer wrote: post #49
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…

> 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 losses sub-$200 didn't materially harm the users? Very probably. The general principle of Article III jurisprudence is that you have to demonstrate concrete, particularized harm to bring a case, not generalized, theoretical harm. If your allegation is th…

The harm is more particularized for those whose stock was auto-sold at the dip for a margin call because they had bought the stock in an instant account.
Post reply on HN