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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

#121

Post by quercusa »

ditonal wrote: post #104
codesternews wrote: post #74

Earlier quoted context omitted.

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.

Totally right, and furthermore, Robinhood is facing some serious solvency issues. Their PR releases claiming this was clearing house related was already highly dubious, and is self-contradicting because they are blaming it on a liquidity issue while saying it's not a liquidity issue. But this is happening at the same time was mass account withdrawals/closures, and we're now learning this not only threatens their gene…

FDIC is for banks. SIPC (of which RH is a member) is for brokerage houses.

https://www.sipc.org/about-sipc/

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

#122

Post by doanerock »

ditonal wrote: post #104
codesternews wrote: post #74

Earlier quoted context omitted.

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.

Totally right, and furthermore, Robinhood is facing some serious solvency issues. Their PR releases claiming this was clearing house related was already highly dubious, and is self-contradicting because they are blaming it on a liquidity issue while saying it's not a liquidity issue. But this is happening at the same time was mass account withdrawals/closures, and we're now learning this not only threatens their gene…

"250,000 on Robinhood, your account is FDIC insured" That is only for the cash on hand, the securities are covered by SIPC.

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

#123

Post by [deleted] »

gruez wrote: post #27
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…

>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.

[deleted]

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

#125

Post by jcranmer »

pmichaud wrote: post #93
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…

I know nothing, so here's a question: instead of framing it like the concrete harm was lack of profit (which is theoretical), could they frame it as the concrete harm being that robinhood turned the situation from potentially profitable to no chance of profit? Like if I'm fishing, I might not catch a fish that day, but if you collapse the pier I'm fishing from then you've concretely caused particular harm to my chanc…

I am not a lawyer, and so I generally only know what law I find out from reading cases that interest me. And that means that while I do know several general legal principles, I am generally ignorant on how those legal principles actually get applied in boundary cases.

Answering this sort of question likely requires digging through cases at the district and circuit court level to find people who made this kind of argument, and seeing if the court bought it or not. I'm not paid to do that, and the people who are are paid big bucks to do so.

But my suspicion is that you have to draw a pretty strong link between the actions of the defendant and your losses, to the point that you really no had other option than to eat the losses. In the case of the pier collapse, you might be able to swing that if there were nowhere else you could fish from. But in the case of Robinhood, I'd be surprised if you could sustain that argument, especially because you've signed this pesky contract.

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

#126

Post by ALittleLight »

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…

I don't understand the "deposit needed" aspect. I can't buy 2 shares of AMC at 12 dollars each but can buy 200 shares of TSLA at 800 each? How does that work?

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

#127

Post by ll931110 »

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…

As long as Robinhood offers excellent UX, people will return. Look how many claims over Facebook's digital privacy, including companies boycotting Facebook, and yet people still use it now. Good UX is hard to beat.

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

#128

Post by alacombe »

nceqs3 wrote: post #97
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)?

Everything is securities fraud - Matt Levine

> Everything is securities fraud, as long as there is political will to prosecute

FTFY

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

#129

Post by JMTQp8lwXL »

ditonal wrote: post #104
codesternews wrote: post #74

Earlier quoted context omitted.

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.

Totally right, and furthermore, Robinhood is facing some serious solvency issues. Their PR releases claiming this was clearing house related was already highly dubious, and is self-contradicting because they are blaming it on a liquidity issue while saying it's not a liquidity issue. But this is happening at the same time was mass account withdrawals/closures, and we're now learning this not only threatens their gene…

The solvency issue is the root cause leading me to leave Robinhood personally. The limitation on market orders was the symptom; the cause was a rotten core. This is the true reason why everyone should leave Robinhood. I do not want to deal with realizing FDIC/SIPC insurance preferably ever in my lifetime.

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

#130

Post by mancerayder »

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 have mixed feelings about this. On the one hand, I'm upset that centralized control led to big tech being able to so easily squash ideological competition (Parler and NY Post, and I am no ally of these, as well as stuff on the left and many individuals), and I want to see some sort of government whip-cracking. On the other hand, if they repeal 230 and everyone is afraid of lawsuits, then you'll see comments disappear everywhere, content disappear everywhere, freedom to publish diminish, and not platforms but content itself be centralized to that which is 'approved.'
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