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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

#81

Post by shawabawa3 »

im3w1l wrote: post #79
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.

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.

if you are long a company then you benefit from helping it. For example, lobbying to dismantle environmental regulations to increase the value of your fossil fuel stocks

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#82

Post by MperorM »

im3w1l wrote: post #79
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.

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.

This is the same argument often made against prediction markets. I remain unconvinced this is a significant issue, but I'm always open to changing my mind :)

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#83

Post by dlgeek »

MH15 wrote: post #53

Currently Robinhood won't send me my tax forms from 2020. I have a trivial amount of money in the account but it's the only thing preventing me from filing taxes yet. Everything else has been ready since early March.

That's not a Robinhood thing, that's based on the investments you had in it. A lot of those have a March 1st or March 15th deadline (depending on type) to get their tax reporting done and reported back, and your broker is blocked on finalizing their forms until they finish those.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#84

Post by diehunde »

AlwaysRock wrote: post #78
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.

What they did wrong was not having the resources to handle that volatile environment. I know other companies also halted trading, but many didn't. They are bitting off more than they can chew.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#85

Post by bidirectional »

shawabawa3 wrote: post #81
im3w1l wrote: post #79

Earlier quoted context omitted.

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.

if you are long a company then you benefit from helping it. For example, lobbying to dismantle environmental regulations to increase the value of your fossil fuel stocks

You also benefit from harming its competitors.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#86

Post by CydeWeys »

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.

As does going long. Your classic pump-and-dump scheme has led to thousands of disinformation campaigns that don't require shorting at all.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#87

Post by nix0n »

dangerbird2 wrote: post #47
fractionalhare wrote: post #37

Earlier quoted context omitted.

> 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.

To clarify, People incorrectly assumed that because the short interest to float percentage was over 100%, the hedge funds had to be naked shorting. This is not true at all: because of how short selling works, there can be more than one short sale tied to a single share. Seller A borrows a share, sells it to buyer B. Buyer B then leases the share to Seller C, who then short sells it. This is not a naked short, but a p…

> With the exception of market makers, this is illegal

Do you mean, this is legal for market makers?

Is there any other way that the number of shares being shorted, could be greater than the number of shares in existence?

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#88

Post by CydeWeys »

diehunde wrote: post #84
AlwaysRock wrote: post #78

Earlier quoted context omitted.

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.

What they did wrong was not having the resources to handle that volatile environment. I know other companies also halted trading, but many didn't. They are bitting off more than they can chew.

Is that illegal though? I don't think so.

And also, they were offering customers a courtesy to use unsettled funds to buy stocks immediately, rather than waiting two business days for funds to clear. Most customers generally appreciate this feature (I certainly do!).

The only thing I'd say they did wrong (but not illegally so) was not having finer-grained controls ready to go to be able to shut down purchases of shares using unsettled funds and/or margin, while still allowing purchases by users with settled funds. This is a feature that some other brokers already have, i.e. you can buy large caps with unsettled funds but penny stocks require the use of settled funds.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#89

Post by klmadfejno »

CydeWeys wrote: post #86
klmadfejno wrote: post #73

Earlier quoted context omitted.

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

As does going long. Your classic pump-and-dump scheme has led to thousands of disinformation campaigns that don't require shorting at all.

On some level shorting is worse though. A pump and dump scheme hurts investors. A shorting scheme can hurt investors and destroy the company.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#90

Post by CydeWeys »

MH15 wrote: post #53

Currently Robinhood won't send me my tax forms from 2020. I have a trivial amount of money in the account but it's the only thing preventing me from filing taxes yet. Everything else has been ready since early March.

I've had this problem going back two decades now with a variety of brokerages. The final deadline for all the forms to get out is March 15th, so generally I don't even bother doing taxes until early April.

What's even worse is not what Robinhood is doing, but what other brokerages are doing, which is that they trick you by sending out provisional 1099s in January or February even though the companies/funds whose stock you own aren't finalized yet, you file your taxes, and then you get an amended 1099 in March that requires you to file an amended state and federal tax return at extra hassle and extra cost.

For the 90 day span of January through March I just collect all the tax forms in a drawer, and then in April I get them all out and do taxes. You don't have all the information in before then, not if you trade stocks anyway. If you only have W2 income, then you can file earlier, as the deadline for that is much earlier.

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