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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

#151

Post by wilde »

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.

Robinhood created this problem for themselves by not clearly communicating what was going on as it was happening. Plenty of other brokers ran into capital requirements issues and explained what was happening in real time. Robinhood didn’t and so they let internet conspiracies fill the void.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#152

Post by KuhlMensch »

jcranmer wrote: post #67

I've read a couple of the lawsuits on courtlistener. From what I've read, these lawsuits are going to go absolutely nowhere. The biggest problem most of the lawsuits face is that there is a provision in the Terms of Service that basically says that Robinhood can prevent you from trading in any stock it wishes. Any complaint that amounts to "Robinhood violated its contract" is going to go down in flames as a result--i…

One side-effect is the suits provide a lens on the parts of the T&Cs that retail investors do not like.

Court action (and senate hearings)have the ability to hold the publics attention under certain circumstances. Especially if there is a reviled antagonist, for which hedge funds are a good casting

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#153

Post by mam2 »

rualca wrote: post #148
foolmeonce wrote: post #141

Earlier quoted context omitted.

They let their customers sell which was probably a fiduciary responsibility. An obligation to maintain the market for a stock because a portion of it's owners are your customers would be a bizarre responsibility.

> They let their customers sell which was probably a fiduciary responsibility. Given the context of gamestop's stock, only allowing to sell stocks is the exact opposite of protecting the customer's best interests. I mean, the high demand for gamestop's stock was motivated by the rally behind a retail-backed short squeeze, where hedge funds were reported to have massively shorted gamestop's stocks. Barring customers f…

They blockee when it was at the top tho.. and most shares had been bought. There was 0 volume.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#154

Post by dustymcp »

CydeWeys wrote: post #95
klmadfejno wrote: post #89

Earlier quoted context omitted.

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

Shorting can also help investors in the market at large if it helps bring down companies that are obvious scams. Some short seller reports have pretty famously destroyed companies that were up to no good, preventing further harm to future investors and boosting confidence in the valuations of the rest of the market. If there's no money in doing all of those short seller reports, then people won't do them, and the mar…

This is the truth shortsellers are not just bad, like All Long buyers are not all good..

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#155

Post by chii »

mam2 wrote: post #153
rualca wrote: post #148

Earlier quoted context omitted.

> They let their customers sell which was probably a fiduciary responsibility. Given the context of gamestop's stock, only allowing to sell stocks is the exact opposite of protecting the customer's best interests. I mean, the high demand for gamestop's stock was motivated by the rally behind a retail-backed short squeeze, where hedge funds were reported to have massively shorted gamestop's stocks. Barring customers f…

They blockee when it was at the top tho.. and most shares had been bought. There was 0 volume.

There was 0 buy volume from retail, but there were sell volume, thus pushing the price down.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#156

Post by chii »

nrmitchi wrote: post #129
CydeWeys wrote: post #127

Earlier quoted context omitted.

But the point is that they can meet the deposit requirements on settled customer funds easily with those funds themselves, since those funds are actually settled. But on unsettled customer funds, they have to come up with their own money to bridge the gap until the customer funds settle.

No, they can't. They can't use customer funds for DTCC deposit requirements. It's just not allowed. IIRC the deposit requirement was raised to 100%. Even if the customer funds were settled, and the customer wanted to buy 1 share of GME for $300, Robinhood would have to post $300 of it's own money , just in case. Now would Robinhood get that money back? Most likely, but that doesn't mean they don't have to have it to…

> the deposit requirement was raised to 100%.

the question becomes - who/what had the power to raise this deposit ratio, and did parties that would stand to lose a lot if GME continued to rise had influence in making this deposit requirement higher?

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#157

Post by chii »

ericmay wrote: post #62
gruez wrote: post #59

Earlier quoted context omitted.

The point is that the tactic isn't viable in the first place. It's almost like saying that we should ban people from making perpetual motion machines.

Sure, insert any other similar tactic in place of a short ladder and I'd be interested in the discussion of why or why not it should be allowed. I'm also interested in discussing whether or not ETFs should exist. I wonder at some point if you just kind of eliminate price discovery and prop up zombie companies.

> ETFs should exist.

i assume you mean passive index investing (via the instrument called ETF).

And no, it won't eliminate price discovery unless there's some 80-90% of the transactions that is only passive. And if that's the case, an enterprising active manager would spot this discrepency, and profit from the abitrage.

So in effect, passive investing is piggy-backing off the price discovery of active managers, and this reaches a balance.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#158

Post by rualca »

mam2 wrote: post #153
rualca wrote: post #148

Earlier quoted context omitted.

> They let their customers sell which was probably a fiduciary responsibility. Given the context of gamestop's stock, only allowing to sell stocks is the exact opposite of protecting the customer's best interests. I mean, the high demand for gamestop's stock was motivated by the rally behind a retail-backed short squeeze, where hedge funds were reported to have massively shorted gamestop's stocks. Barring customers f…

They blockee when it was at the top tho.. and most shares had been bought. There was 0 volume.

> They blockee when it was at the top tho..

That's a weird re-phrasing of "they caused the stock to drop by manipulating the market through blocking buys".

And then there's the backpedalling by RobinHood when they reinstated buys but at a very limited rate of what? One per customer?

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#159

Post by SilasX »

Dma54rhs wrote: post #144
SilasX wrote: post #110

Earlier quoted context omitted.

I don't think the inviting was where it went wrong, but in having a criminally bad UX that deceives those same naive users. Like executing your purchase as a margin buy without making clear it is a margin buy that can be sold out from under you: https://news.ycombinator.com/item?id=25962906 Or the suicide from the kid who didn't understand his position wasn't actually extremely negative.

The unfortunate story with the kid was RH showing him (temporary) correct information. In any case it always comes back to argument if general public is suitable to participate in the market which in turn brings in more legislation to keep retail market far away from Wall Street.

If his position was not substantively very negative, then it was not correct to represent position as very negative. (Even if he was waiting for an asset to settle, that has a positive value that should have canceled out any negative.)

The fact that it's "normal convention" to represent positions this way is a problem with the convention, not with retail investors.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#160

Post by scotuswroteus »

jcranmer wrote: post #67

I've read a couple of the lawsuits on courtlistener. From what I've read, these lawsuits are going to go absolutely nowhere. The biggest problem most of the lawsuits face is that there is a provision in the Terms of Service that basically says that Robinhood can prevent you from trading in any stock it wishes. Any complaint that amounts to "Robinhood violated its contract" is going to go down in flames as a result--i…

Did Robinhood make people click that they accept the terms?
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