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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

#81

Post by ffggvv »

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…

there isn't going to be an exodus.. just a whiny minority complaining they cant bankrupt themselves

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

#82

Post by nullc »

Alex3917 wrote: post #23
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…

> 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.

The collateral requirements differ from stock to stock.

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

#83

Post by gruez »

ummonk wrote: post #70
jcranmer wrote: post #49

Earlier quoted context omitted.

> 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.

Is there proof of this? This gets repeated a lot and the best "proof" I've seen was a wsb post claiming they got sold "without [their] permission", but stopped short of saying whether they were using margin or not.

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

#84

Post by bmitc »

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...

Right. I get that. But if buying on margin is the problem, block buying on margin. Why block buying when people have the cash already settled in their account as well?

Edit: Answered in another chain.

https://news.ycombinator.com/item?id=25971718

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

#85

Post by PeterStuer »

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…

So where do those friends plan to migrate to?

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

#86

Post by llcoolv »

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…

This is a very good point, the question is where to go? I am European, we don't even have Robinhood here, so I had a dead eToro account with 140 EUR on it and Interactive Brokers, which we all thought was synonymous with quality and respect. However, they folded first, along with Degiro, which was the other "well-reputed" option available to us. Everyone started running to XTB, which limited trading on Friday afternoon/night.

In the US there is Webull, which went against their clients initially and then reversed. As an European - where should I go to? Binance/Kraken seems the only reasonable option at this point, however crypto has ties to the real world only on macro-economic scale (although very relevant) and you cannot use your "capital" to influence the world around you in a good way.

P.S. I know that Fidelity and other well-reputed vendors didn't turn coats, but I am not sure it is an option here. P.P.S. This reminded me of https://www.investopedia.com/terms/t/tina-there-no-alternati....

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

#87

Post by Mountain_Skies »

User23 wrote: post #11
kleton wrote: post #7

Earlier quoted context omitted.

Each FINRA arbitration case would be expected to cost the company up to 10,000 in fees. If anywhere near the 100,000 users who left negative reviews on the Google Play store for the app file an arbitration and pay the filing fee, Robinhood will absolutely go bankrupt. If you are/were a Robinhood user: https://www.finra.org/arbitration-mediation/initiate-arbitra...

And under California law consumers cannot be forced to bear those costs.

IIRC, customers still have to pay the filing fee, but beyond that, the costs are on the company.

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

#88

Post by jcranmer »

ummonk wrote: post #70
jcranmer wrote: post #49

Earlier quoted context omitted.

> 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.

There are definitely same claims for harm that are stronger than others. Whether any of the 6 (!) class action suits currently pending actually claim that harm is a different matter.

Of the stuff I see on court listener:

* 3 don't have documents available (and I'm not going to bother signing up for PACER just to find out)

* 1 has a claim predicated on "I could have bought or shorted GME" (yeah, not gonna fly)

* 1 has a claim predicated on "the value of GME stock fell, causing me loss" (doesn't mention if the stock was actually sold, so it's purely paper loss, so really not gonna fly)

* 1 has a claim predicated on "I tried to buy, but couldn't" (best chance of succeeding, but I think they're still screwed anyways)

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

#89

Post by mrep »

malwarebytess wrote: post #33
kleton wrote: post #7

Earlier quoted context omitted.

Each FINRA arbitration case would be expected to cost the company up to 10,000 in fees. If anywhere near the 100,000 users who left negative reviews on the Google Play store for the app file an arbitration and pay the filing fee, Robinhood will absolutely go bankrupt. If you are/were a Robinhood user: https://www.finra.org/arbitration-mediation/initiate-arbitra...

I think there's a very good chance the reviews were not organic, but instead automated.

I highly doubt that. I filed a 1 star review and it literally only took like 30 seconds as you don't have to write anything to rate it.

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

#90

Post by gruez »

awillen wrote: post #57

Why can't non-Robinhood holders of GME sue Robinhood, though? If you can prove that RH's actions drove the stock down, then aren't they the victims (and also not bound by the user agreement)?

>If you can prove that RH's actions drove the stock down

That'd at best, prove harm, which is a necessary but not sufficient condition for a successful lawsuit. You'd also need to prove wrongdoing, which is hard because they seemed to have acted so they can fulfill their deposit requirements.

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