Robinhood and Didi to Kick Off a Hot IPO Summer

I’m not a fan of Robinhood, but everything that vkou has been saying is true.

My understanding is that Robinhood is self-clearing, not that Citadel is its prime brokerage.

The clearing margin requirement came from NSCC. Clearing margins CANNOT be satisfied using client funds. So it’s Robinhood’s own capital—and whatever credit lines they’ve negotiated—that would need to meet those requirements.

If I deposit 100k into Robinhood and keep it there as cash for 2 years, then one day I plunk all of it into GME, then until all my trades settle two days later, Robinhood will have increased clearing margin requirements based on the VaR of my unsettled trades. (Unless, my trade offsets someone else’s from within Robinhood, in which case I believe RH’s margin would reduce—but I’m not sure about this part.)

And if one day after my trades, GME’s stock goes up 10x, the VaR goes up roughly 10x as well. Even though I would have a claim to a lot higher value in my account once everything is settled, until the trades are settled, it’s a major cash crunch for RH.

The fact of the matter is that RH was not under-capitalized or have disproportionately small credit lines as a portion of their AUM, as compared to other brokerages. It’s just that their users were the ones that acted in a most coordinated way on a stock whose VaR was going through the roof.

I wish I could downvote.

Robinhood implemented restrictions before any other platform though they were not the only ones to do so, held restrictions longer than any of their competitors, used restrictions (sell only) in a way that was unique to Robinhood and falsely made public claims (later to be retracted) that they had chosen to do some or all of this "for the public good."

I would not trust them with a single dollar.

Yes, that's what I'm referring to.

For context, last year's 8-K showed 66% of shares voted. The 8-K also reported a total of 42,886,817 shares voted last year. This year's 8-K, issued 2 days ago, showed 55M votes out of 70M possible. Therefore, 78.5% of shares were voted.

However, unusually, this year's 8-K did NOT report the total number of votes actually received.

Unsurprisingly this is likely because 8-K filings cannot legally show over 100% of shares voted. GME's votes were counted by Computershare [1]. When more votes are received than shares outstanding, the vote tabulator (Computershare) will "scale" the votes proportionally to never exceed 100%. Computershare have publicly documented procedures in place for how they scale votes in the event of overvoting [2].

An off-by-1 rounding error in the 8-K on votes for Lawrence Cheng, compared to all the other board members, is highly suggestive votes have been scaled.

Retail brokers like eToro reported only 63% of eligible votes were cast [3]. Countless international brokers either refused or were unable to allow their shareholders to cast votes.

Since the initial squeeze, the buy-sell ratio as reported by Fidelity [4] vastly favours buying over selling. It's slightly lower than it has been at the moment (currently 76% buys), but back at April 14th when the vote deadline was, it was higher than it is today. This shows retail are not selling, only buying more.

Additionally, the broker non-vote figures in this year’s 8-K are significantly less than in previous years. This is another indicator of vote scaling, given the huge push from retail investors to vote their shares.

These filings are only 2 days old, and truthfully, only time will tell what will come of this. I’ve been watching the price action of GME follow very predictable patterns around option expiry and settlement dates over the past few months, clear patterns are emerging. For more on this you can search “GME FTD cycles”.

My comments here really just cover the tip of the iceberg, and I hope they provided some food for thought for others. I didn’t even start on the blatant media coverups, or the obvious patterns of brand new Reddit accounts almost exclusively being used to encourage sell-offs. Nor coordinated pump-and-dumps on WSB for stocks Citadel own long positions in. Or crypto markets tanking within minutes before liquidity tests begin. Or CNBC abruptly cutting off guests who mention naked shorting. Or brokers who are unable to locate shares. Or Michael Burry, the famed investor who made billions from shorting the housing market in 2008, having taken a long position on GME. Or GameStop only actually publicly acknowledging the potential of a squeeze on their social media, the exact same day their chairman would have received the initial (non-scaled) vote counts.

I could keep going on in more detail but I’ll let others do their own research. I feel I’ve read enough to be confident in my assessment that shorts have not covered, but if I’m wrong, I don’t have more skin in the game than I can afford to lose. We’ll see!

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[1] Page 11, section 9: https://news.gamestop.com/static-files/8f795a88-54a3-4320-b3...

[2] https://www.computershare.com/ca/en/Documents/CPU_OVER_VOTIN...

[3] https://twitter.com/eToro/status/1402643555403829256

[4] https://eresearch.fidelity.com/eresearch/gotoBL/fidelityTopO...