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Robinhood is facing nearly 50 lawsuits over GameStop frenzy

nytimes.com

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Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#31

Post by astura »

omgJustTest wrote: post #16
VoodooJuJu wrote: post #11

I'm pretty skeptical of the negative attention Robinhood is receiving. It seems like the entities who actually acted in bad faith, the ones who attempted illegal shorts, are trying to divert attention. Like someone else said, Robinhood is just the fall guy here.

Hard to hear. Robinhood has normalized pay for flow, a service that is literally shaving cash off each order in exchange for “free trading”. Pff can only generate net revenue by making traders pay more per trade than actual best execution, which Robinhood is suppose to be legally required to deliver. The SEC in the 90s and 2000s thought the practice amounted to middle manning traders and should be illegal. Basically:…

Isn't this something almost all brokerages do?

https://efipm.medium.com/zero-commission-brokers-selling-ord...

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#32

Post by cwhiz »

I don’t really care what the rules are. Arbitrarily preventing people from buying, but not selling, is market manipulation. Any company that took part in this should be dismantled. If you need to halt trading because of liquidity requirements, halt all trading.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#33

Post by BunsanSpace »

pjc50 wrote: post #27
VoodooJuJu wrote: post #11

I'm pretty skeptical of the negative attention Robinhood is receiving. It seems like the entities who actually acted in bad faith, the ones who attempted illegal shorts, are trying to divert attention. Like someone else said, Robinhood is just the fall guy here.

> the ones who attempted illegal shorts [citation needed]; is this actually true or is this just part of the WSB sales pitch?

Melvin capital and several other hedge funds engaged in naked short selling, and many backbone clearing houses enabled it via share counter fitting. (naked short selling is illegal)

The deeper issue is the SEC not cracking down on the fail to delivers and naked short selling.

I think Robinhood and other brokerages are the scape goats here. Their hands where tied when the companies that processed their orders refused to process trades for those stocks.

The whole debacle has exposed a lot of corrupt, fraud and other nasties while showing the SEC is completely unwilling to do their job.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#34

Post by ericmay »

VoodooJuJu wrote: post #11

I'm pretty skeptical of the negative attention Robinhood is receiving. It seems like the entities who actually acted in bad faith, the ones who attempted illegal shorts, are trying to divert attention. Like someone else said, Robinhood is just the fall guy here.

My issue isn’t the shorts, it’s when the shorts (or others) start messing with the game board. You should be able to short a stock, no doubt about it. But you shouldn’t be able to coordinate “short attacks” or use other tactics.

I wonder if it may be a good idea to remove computers from trading except for execution enacted by humans because of human research. Should Bloomberg terminals be legal? Should everyone effectively have the same hardware? I wonder how someone in Oklahoma can compete with a large bank. Should they be able to?

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#35

Post by penagwin »

BunsanSpace wrote: post #33
pjc50 wrote: post #27

Earlier quoted context omitted.

> the ones who attempted illegal shorts [citation needed]; is this actually true or is this just part of the WSB sales pitch?

Melvin capital and several other hedge funds engaged in naked short selling, and many backbone clearing houses enabled it via share counter fitting. (naked short selling is illegal) The deeper issue is the SEC not cracking down on the fail to delivers and naked short selling. I think Robinhood and other brokerages are the scape goats here. Their hands where tied when the companies that processed their orders refused…

Is there a source for this? I watched their testimony to congress and they said they aren't even able to place naked shorts/calls.

You can still get a short interest above 100% without selling naked calls/shorts.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#36

Post by ojnabieoot »

Everything about this story is just so frustrating.

- While the GameStop thing should be investigated and the lack of transparency criticized, Robinhood’s stated reason for halting the trades is plausible and corroborated by other people. I suspect their shadiness was because their internal finances are worse than they are letting on. The idea that they were acting as the foot soldiers of hedge funds (who were hardly overexposed to GME anyway) is preposterous.

- Robinhood absolutely deserves to get in legal trouble (like “send the CEO to prison”) for its horrendously predatory “appification” of retail investment[1]. I had a poor opinion of Robinhood and I was still shocked by how horrible their behavior was[2]:

> In 2019, Robinhood rolled out a new cash management feature with an early access waitlist and utilized gamification to reward customers who interacted daily with the application by improving their position on the waitlist. Customers who did not interact daily watched their position on the waitlist precipitously decline, while those who succumbed to the effects of Robinhood's gamification soared up and up the waitlist.

> In an effort to encourage trading, Robinhood provides lists of securities on its application, including lists of the most-traded securities on Robinhood's platform and the most popular securities traded by Robinhood customers. This is no different than a broker-dealer agent handing a list of securities to a customer, pretending to be surprised when the customer purchases securities from that list, and then proclaiming that he made no recommendations to that customer.

> Robinhood advertisements use young actors and illustrate Robinhood's attempt to lure young, inexperienced investors into using its platform...[f]or example, one such advertisement contains a clip of a young adult saying "I'm a broke college student and investments might help my future tremendously."

Sincerely rotten folks at that company.

[1] https://www.cnbc.com/2020/12/16/robinhood-reportedly-facing-...

[2] https://www.sec.state.ma.us/sct/current/sctrobinhood/MSD-Rob...

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#37

Post by fractionalhare »

BunsanSpace wrote: post #33
pjc50 wrote: post #27

Earlier quoted context omitted.

> the ones who attempted illegal shorts [citation needed]; is this actually true or is this just part of the WSB sales pitch?

Melvin capital and several other hedge funds engaged in naked short selling, and many backbone clearing houses enabled it via share counter fitting. (naked short selling is illegal) The deeper issue is the SEC not cracking down on the fail to delivers and naked short selling. I think Robinhood and other brokerages are the scape goats here. Their hands where tied when the companies that processed their orders refused…

> Melvin capital and several other hedge funds engaged in naked short selling, and many backbone clearing houses enabled it via share counter fitting. (naked short selling is illegal)

No they didn't. Naked short selling is different from short selling while the short interest is high.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#38

Post by fractionalhare »

VoodooJuJu wrote: post #11

I'm pretty skeptical of the negative attention Robinhood is receiving. It seems like the entities who actually acted in bad faith, the ones who attempted illegal shorts, are trying to divert attention. Like someone else said, Robinhood is just the fall guy here.

Which firms attempted illegal short selling, and what is your specific evidence to support that they did?

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#39

Post by sokoloff »

xadhominemx wrote: post #29
trestenhortz wrote: post #6

Earlier quoted context omitted.

That is absolutely not the reason that they publicly stated they stopped allowing purchasing and only allowed selling. I’d dance on the grave of this company.

Actually it is the reason they stated

There was a several hour period one evening where some “it’s for your own good because of the volatility” message was the first comms from the company on the topic.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#40

Post by fractionalhare »

Railsify wrote: post #25
VoodooJuJu wrote: post #11

I'm pretty skeptical of the negative attention Robinhood is receiving. It seems like the entities who actually acted in bad faith, the ones who attempted illegal shorts, are trying to divert attention. Like someone else said, Robinhood is just the fall guy here.

Were the shorts illegal? I keep seeing the accusation but I don't think it's possible to short sell a stock that you have not borrowed.

It's possible; it's called naked short selling. The only reason people actually think it might have happened is because of widespread accusations on reddit. These accusations are financially illiterate and deluded conjecture, but they're stated with utter conviction so a lot of people find them convincing.

There isn't actually any evidence the named hedge funds were engaged in naked short selling. For the most part, people seem to misinterpret short interest and failure to deliver data as an indication naked short selling occurred.

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