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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

#161

Post by indecisive_user »

trident5000 wrote: post #132
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 are the number 1 app in app stores right now. People are morons. They're not going out of business anytime soon.

They are the #1 app because people were interested in trading GME, and the network effect led to lots of recommendations to download robinhood. Now there is a very negative sentiment towards robinhood. Very few people online will recommend it.

Worth noting that Webull, a robinhood competitor, is the #2 app in the play store. They initially restricted stocks but later allowed people to freely buy and sell.

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

#162

Post by phreack »

tptacek wrote: post #120
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.

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 allowe…

Even assuming you're right, they've taken a massive PR hit and the public is convinced that RH screwed over their users by choice, and made a profit out of it. I don't think they'll come back in one piece, unless no one capitalizes on the movement and gets some competition going for a while.

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

#163

Post by rapnie »

llcoolv wrote: post #86
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 afterno…

> This is a very good point, the question is where to go?

There's Bux in The Netherlands. Haven't used them, though.

https://getbux.com/

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

#164

Post by jb1991 »

alasdair_ wrote: post #77
TuringNYC wrote: post #64

Earlier quoted context omitted.

Not on options

While technically true, I wonder if people care much about a $1 fee on an entire contract (100 shares).

Most of the time you'd be trading more than one contract, though. Say you want bet on cheap out of the money options, you could easily see a commission of $10 - $50 on a single trade if you buy up a bunch of them.

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

#165

Post by pfisch »

sroussey wrote: post #159
pfisch wrote: post #146

Earlier quoted context omitted.

Yeah....except all the more legitimate brokerages didn't limit anything. TD Ameritrade made me place limit orders, but that is not even close to the same thing. Fidelity was unaffected.

Public was limited by their clearinghouse. Several brokerages did this. Some did not, mostly since their clientele wasn’t buying these anyhow.

Name a big, reputable brokerage that did this.

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

#166

Post by kilroy123 »

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 agree. They're in big trouble after this. I think a lot of people actually will switch. If they really have an IPO after this, expect a lot of madness.

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

#167

Post by maest »

codesternews wrote: post #160
tptacek wrote: post #120

Earlier quoted context omitted.

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 allowe…

Does not matter. You are dealing with brokage. Its on the brokrage to maintain the service and whenever I want to buy/sell my share I could. Not get restricted. There is no restriction from SEC. Its money in app not privacy issue me/people would compromise.

> There is no restriction from SEC

Correct, the restriction is from the DTCC.

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

#168

Post by pfortuny »

This is not a “user-based” restriction (which I guess is what the law intended to mean) but a wholesale restriction without per-customer reasoning, without notice and without equivalent counterpart (they did not block selling)... At least it is worth looking into.

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

#169

Post by maest »

un-devmox wrote: post #149
tptacek wrote: post #120

Earlier quoted context omitted.

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 allowe…

Why did the collateral requirements shoot?

Because of the large realised vol in those names (paired with large future expected volatility) the DTCC asked for much larger margin requirements.

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

#170

Post by skizm »

oneeyedpigeon wrote: post #114
skizm wrote: post #22

Earlier quoted context omitted.

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 ?

Selling helps them cover all the loans they gave out to pretend that buying / selling stocks is instant (and depositing money). The clearing house they use dramatically increased the collateral needed due to market volatility and they basically did not have the cash. They literally had to go raise another billion dollars in funding over night to cover costs.
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