Analysis: Robinhood protected from lawsuits by user agreement, Congress • Hacker News Board

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

#111

Post by dmw_ng » Sat, Jan 30, 2021, 7:16 PM UTC

These complaints need to reframed in terms of the sellers of the extremely underpriced call options that triggered the insane volatility in the first place. There are only a tiny number of companies responsible, possibly as few as one

Robin hood users certainly weren't clicking around a UI buying stocks fast enough to cause the incredible moves witnessed, that could only be the action of the option market makers attempting to hedge options they'd sold to those users with a notional value vastly exceeding available liquidity

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

#112

Post by LatteLazy » Sat, Jan 30, 2021, 7:16 PM UTC

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…

Yes, because if they'd bought more they'd have lost money, and RobinHood only stopped them buying.

"but we could have driven the price up by cornering the market" I hear RobinHood/WSB users say.

Maybe, but that would be illegal market manipulation. So if your case is that you lost out because RobinHood wouldn't facilitate a crime, you have a poor case.

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

#113

Post by belorn » Sat, Jan 30, 2021, 7:18 PM UTC

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…

My bet is that this will be lasting to the point where Robinhood will need to change name. Out of the things people are a bit careful with and want full control of, their own money is distinctly one of those. The Robinhood story as it being describe include both forced sales, as well as not being allowed to user their money to buy stocks. Both seems pretty scary to would be new customers as well as existing ones.

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

#114

Post by oneeyedpigeon » Sat, Jan 30, 2021, 7:19 PM UTC

skizm wrote: post #22

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.

Would they have gone out of business if they had suspended trading as opposed to suspending just buying?

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

#115

Post by jsonne » Sat, Jan 30, 2021, 7:19 PM UTC

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…

Robinhood canceled my GME calls orders at 1am and sent a message confirming that I canceled them (I didn't). Doesn't matter if they're technically in their rights or not the trust is shattered and I'm closing my account. Everyone else even in IRL spaces agrees with the sentiment. Anecdotally my barista at my local coffee spot told me to move to Webull or another platform so the sentiment seems to be widespread.

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

#116

Post by katbyte » Sat, Jan 30, 2021, 7:20 PM UTC

notyourwork wrote: post #10

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...

Submitting a negative review is a lot less effort than dealing with a court case. I think it’s unlikely a small percentage of 100,000 will pursue.

If 1% do that’s 1,000,000...

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

#117

Post by LatteLazy » Sat, Jan 30, 2021, 7:24 PM UTC

why_Mr_Anderson wrote: post #30

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.

I don't necessarily support forced arbitration but... I would rather not pay the court fees because a bunch of people are upset their broker didn't accept their orders and want to waste the courts time over it.

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

#118

Post by headmelted » Sat, Jan 30, 2021, 7:25 PM UTC

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…

Even without the user exodus I’d think there’s cause for concern regardless.

They’ve said their financial position is stable, yet they’re stopping trades because of the volume moving through their clearance system (if I’ve understood what Vlad was saying to Bloomberg correctly, they no longer use an external clearing house).

If it walks like a duck, and it quacks like a duck, then it’s probably a duck. And it’s probably good that it’s walking as it doesn’t sound like there’s a whole lot of liquidity left to swim in.

I worry about this for other massive firms, even leaving the current circus aside. As unlikely as it might seem, what happens if a Schwab or a Fidelity or a Vanguard gets into trouble from some as-yet-unseen event?

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

#119

Post by ergocoder » Sat, Jan 30, 2021, 7:25 PM UTC

boatsie wrote: post #100

ummonk wrote: post #63

Earlier quoted context omitted.

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.

I don’t know Vlad’s background but is it possible he doesn’t understand the exact details?

Claiming the CEO doesn't know how their own company works doesn't really help.

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

#120

Post by tptacek » Sat, Jan 30, 2021, 7:27 PM UTC

codesternews wrote: post #74

maest wrote: post #44

Earlier quoted context omitted.

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.

This time it is different. Previously they had glitches etc. This time they by choice restricted users which lead their users loose. Whole concept they broke. If any investor still uses robinhood they are stupid. Your money and stock is not safe with Robinhood. They can restrict you any time.

Your claim that RH restricted users by choice seems false. RH is required by NSCC/DTCC rules to post collateral for trades in the process of settlement. As a result of volatility, the collateral requirements for meme stocks shot up from something like single digits to something perhaps approaching 100%. Robinhood was apparently forced to draw down a $600MM line of credit just to cover the trades it had already allowed.