Robinhood is facing nearly 50 lawsuits over GameStop frenzy • Hacker News Board

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#131

Post by CydeWeys » Wed, Mar 03, 2021, 6:32 PM UTC

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…

Hrm, so that makes Robinhood's situation even more impossible then. There's nothing they could've done to continue to allow people to buy $GME absent coming up with billions of dollars for a few days' worth of deposits.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#132

Post by elefanten » Wed, Mar 03, 2021, 6:51 PM UTC

trestenhortz wrote: post #6

vga805 wrote: post #4

Earlier quoted context omitted.

Multiple brokerages shut down buying due to the collateral requirements that were raised. Robinhood seems like the fall guy here, hopefully people start asking the right questions about the collateral and the manipulation there.

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.

Who cares? Companies rush out dumb comms under pressure then walk em back or change them.

They're not obligated to stick to the first thing they said on a topic -- especially when it's customer comms.

It's not a good source for answering what they did / why they did it.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#133

Post by gpm » Wed, Mar 03, 2021, 7:21 PM UTC

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.

Incidentally affecting the market is not market manipulation...

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#134

Post by unethical_ban » Wed, Mar 03, 2021, 7:43 PM UTC

gpm wrote: post #133

unethical_ban wrote: post #68

Earlier quoted context omitted.

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.

Incidentally affecting the market is not market manipulation...

Their incompetence is the direct cause of the tanking of a stock.

Even if it wasn't intentional, it was artificial.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#135

Post by TameAntelope » Wed, Mar 03, 2021, 7:56 PM UTC

drone wrote: post #130

TameAntelope wrote: post #103

Earlier quoted context omitted.

Another great example of Robinhood getting blamed for things it can’t control. Being the retail face of a complex industry apparently results in you getting blamed for the complexity.

One might argue that the original sin of RH is marketing to people who don't have a grasp of how these systems work and not being used to having to learn these things when dealing with a consumer product. Some of the barriers to dealing with traditional brokerages created opportunities to learn, and to put one's self into the mindset that this is a thing that is new and complex (on your first encounter), and your gen…

Robinhood is, for many people, the only name they know in this space. Therefore, it must be their fault.

As the Internet grew, it raised the bar higher and higher on the "baseline" level of things one needed to reasonably know about before participating in any given conversation intelligently (bear with me). As a result, it became growingly acceptable to declare something one doesn't understand as morally "bad" for being complex, and since the experience of encountering something one didn't understand was widely shared, many folks pounced on that complexity as the problem, not their failure to grasp it.

It's infinitely easier to declare a system as "bad" than to spend time to understand why it's built the way it is. Robinhood just happens to be what many people think of as "the system", rather than the actual financial system Robinhood is built on top of.

I believe this could apply across a number of problems we're seeing online right now. Groups of people who band together (right or wrong) to rail against a system that exists for reasons they do not understand. Sometimes it's justified, sometimes it's not, but every time you get that same whiff of populist anger such as what Robinhood is experiencing right now.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#136

Post by Swenrekcah » Wed, Mar 03, 2021, 8:04 PM UTC

gruez wrote: post #51

SkyBelow wrote: post #44

Earlier quoted context omitted.

Is this needed to make a claim? If I say that someone stole the Declaration of Independence, then I would only need to provide evidence it was stolen, not evidence that shows some particular person stole it. In this case, evidence of illegal shorts is what one would need to provide to back their claim, not evidence that a specific firm engaged in illegal shorts.

>In this case, evidence of illegal shorts is what one would need to provide to back their claim Okay, what's the evidence of illegal shorts?

Everything I (think I) know about this I have learned in the last few weeks so take this with a grain of salt, but I understand that GME shares have failed to deliver a lot which can be evidence of naked shorts which are supposedly illegal.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#137

Post by mam2 » Wed, Mar 03, 2021, 8:58 PM UTC

Kranar wrote: post #122

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…

Contracts do not override a broker's fiduciary duty to its clients. A fiduciary duty is the highest standard of care recognized by law and requires the agent to act in the best interest of the principal. Once the evidence is presented, a plaintiff may find that Robinhood did not act with the highest standard of care, did not do everything it could have done to prepare for and handle the situation. We don't know becau…

Rh will argue best financiary duty was to protect his customers from the volatility

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#138

Post by MperorM » Wed, Mar 03, 2021, 9:19 PM UTC

mdoms wrote: post #119

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.

Just so you know, outside of your bizarro-world America-brain, the world was well aware that Covid-19 "was going to be a big problem" without the help of your stock market games.

I'm Danish and live in Denmark.

Please keep your next bigoted comment to yourself, they don't belong on this forum.

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#139

Post by user-the-name » Wed, Mar 03, 2021, 9:31 PM UTC

ceejayoz wrote: post #65

user-the-name wrote: post #61

Earlier quoted context omitted.

> In May 2012

That's not long ago, and it's after the practice was banned. You think the banking industry has had an ethical epiphany and sudden love for regulations in the last decade?

What I think is that if you are going to make a very specific claim that fraud has occurred, you should back that up with some evidence that is similarly specific, not with a "well it could happen, it happened once before nine years ago!"

Re: Robinhood is facing nearly 50 lawsuits over GameStop frenzy

#140

Post by boublepop » Wed, Mar 03, 2021, 9:43 PM UTC

mam2 wrote: post #137

Kranar wrote: post #122

Earlier quoted context omitted.

Contracts do not override a broker's fiduciary duty to its clients. A fiduciary duty is the highest standard of care recognized by law and requires the agent to act in the best interest of the principal. Once the evidence is presented, a plaintiff may find that Robinhood did not act with the highest standard of care, did not do everything it could have done to prepare for and handle the situation. We don't know becau…

Rh will argue best financiary duty was to protect his customers from the volatility

And the question will be posed if making it an absolute certainty that your customers lose value is a justified action because it reduces volatility. And RH will have a tough time arguing. “Yes, yesterday you had 2mil but you didn’t know if it would double or halve. Today you know for sure that you have 100k, so why aren’t you happy? I’m just looking out for your best interests!”