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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

#71

Post by fractionalhare »

nrmitchi wrote: post #60
penagwin wrote: post #35

Earlier quoted context omitted.

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.

This whole "illegal naked short sales" story recently is a conspiracy theory, not a valid theory, so you're not going to get a source. The main difference between a conspiracy theory and a valid theory is that a conspiracy theory is non-falsifiable; any evidence to the contrary is dismissed as "fake news" or "the deep state is hiding the evidence". In your example here of "they testified to Congress under penalty of…

> The main difference between a conspiracy theory and a valid theory is that a conspiracy theory is non-falsifiable; any evidence to the contrary is dismissed as "fake news" or "the deep state is hiding the evidence".

Likewise: if you're debating a claim with someone who is being intellectually honest, they'll receive your evidence and consider it critically on the merits. If you debate a claim with a conspiracy theorist, they will use any evidence you provide them to support the idea that the conspiracy theory is even bigger than they could have imagined - more parties are corrupt, more people are in on it, etc.

It's exhausting.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#72

Post by MperorM »

rob74 wrote: post #69
MperorM wrote: post #66

Earlier quoted context omitted.

why is shorting a company perverted? I would argue it's a great asset to society. Eg. those who shorted stock because they expected covid-19 to cause a market dip, sent a giant signal to the entire world that covid was going to be a big problem.

Nothing against shorting in principle, the OP and me were just referring to being able to "sell" more shares of a company than there are in existence...

How is that perverted? Shorting a stock is fundamentally no different than other types of debt.

Imagine an economy of 3 people, A, B and C.

A has $5.

B borrows $5 from A.

C borrows $5 from B.

A borrows $5 form C.

The economy started with $5 and $0 debt, the economy ends with $5 and $15 debt. Despite the fact that the society's total debt is now 300% the size of its economy, it is no different than how it started. Debt isn't inherently bad. Debt is a tool that allows us to collaborate.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#73

Post by klmadfejno »

MperorM wrote: post #66
rob74 wrote: post #64

Earlier quoted context omitted.

Yeah, about as "perfectly natural" as the stock market soaring while the economy is in crisis (i.e. logical, but completely perverted).

why is shorting a company perverted? I would argue it's a great asset to society. Eg. those who shorted stock because they expected covid-19 to cause a market dip, sent a giant signal to the entire world that covid was going to be a big problem.

It certainly opens up the door to malicious information asymmetries and pr campaigns.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#74

Post by cortesoft »

cwhiz wrote: post #32

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.

It wasn't arbitrary. There is huge risk for brokers when very volatile stocks are bought at heavy volume. The risk is not there when selling stock. The companies backing the risk RH was taking rightfully asked for more collateral, and RH wasn't able to come up with it.

It was in no way arbitrary.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#75

Post by pwnguin »

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.

I'm not even sure Robinhood is falling. Yes they had to take out a billion dollar bridge loan, but that means their assets under management just shot up massively. And now that the frenzy is over, they repay the loan and keep the assets under management.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#76

Post by smogcutter »

rob74 wrote: post #69
MperorM wrote: post #66

Earlier quoted context omitted.

why is shorting a company perverted? I would argue it's a great asset to society. Eg. those who shorted stock because they expected covid-19 to cause a market dip, sent a giant signal to the entire world that covid was going to be a big problem.

Nothing against shorting in principle, the OP and me were just referring to being able to "sell" more shares of a company than there are in existence...

That’s not mysterious or suspicious at all, it’s just a consequence of being able to lend something fungible. Very similar to how bank lending affects the supply of money.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#77

Post by pwnguin »

unethical_ban wrote: post #68
gitdown42 wrote: post #41

Earlier quoted context omitted.

Robinhood deserves negative attention, but not for restricting trades to closing-ony. That appears to not have been much of a choice. They do deserve a lot of negative attention for running a brokerage in a way that invited a lot of risk-ignorant retail traders to instantly trade into leveraged positions for which they should never have been qualified in the first place. Robinhood has the valuation it does because it…

I'm not a big fan of "RH should protect people more" They clearly did not have the finances available to provide the service they offer. Regardless of whether that was forced on them, the outcome was RH's failures manipulating a market. RH should be fined and sued out of existence. I also don't see the value in short selling. Seems like a way to gamble legally in all 50 states.

Short selling is absurdly risky, but selling put options should probably remain allowed.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#78

Post by AlwaysRock »

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.

You think Robinhood did nothing wrong in the eyes of the law? Or that they did not treat their customers (users of the app not the purchasers of their data) poorly? Or that their app did not disable users from trading shares of stocks?

I'd genuinely shocked to see someone say they think Robinhood didnt do anything wrong. Unless I'm misunderstanding you.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#79

Post by im3w1l »

MperorM wrote: post #66
rob74 wrote: post #64

Earlier quoted context omitted.

Yeah, about as "perfectly natural" as the stock market soaring while the economy is in crisis (i.e. logical, but completely perverted).

why is shorting a company perverted? I would argue it's a great asset to society. Eg. those who shorted stock because they expected covid-19 to cause a market dip, sent a giant signal to the entire world that covid was going to be a big problem.

If you are short a company then you benefit from harming it. In the example you provide, the short seller could benefit by exacerbating covid, by sabotaging the response. I'm not saying I'm definitely against all forms of shorting because of this, but that is one drawback at the least.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#80

Post by MperorM »

klmadfejno wrote: post #73
MperorM wrote: post #66

Earlier quoted context omitted.

why is shorting a company perverted? I would argue it's a great asset to society. Eg. those who shorted stock because they expected covid-19 to cause a market dip, sent a giant signal to the entire world that covid was going to be a big problem.

It certainly opens up the door to malicious information asymmetries and pr campaigns.

Yeah that's right.

I am somewhat torn on where to stand on this. On one hand I do see why we would want regulation against insider trading & pump and dumps, on the other hand I worry that regulation isn't preventing either, and society quickly would become inoculated if we legalized it.

When I read Robin Hanson's paper on insider trading and prediction markets, I became much more uncertain about whether we should regulate this area than I used to be.

https://www.researchgate.net/publication/228340813_Insider_T...

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