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Analysis: Robinhood protected from lawsuits by user agreement, Congress

reuters.com

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Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#211

Post by tptacek »

pfisch wrote: post #210
tptacek wrote: post #178

Earlier quoted context omitted.

A nice thing about being a big, reputable brokerage is that you have access to big, reputable piles of cash to cover clearing collateral.

A casino definitely can't shut down a blackjack game in the middle. That is not true. What are you even arguing here? That the purpose of a brokerage is to take customers money and play weird games with it to maximize profits and is allowed to just not have enough money to cover all cash purchases? That is like if a bank just didn't let customers withdraw their money, and kept operating like nothing was wrong. Clearl…

Robinhood stopped allowing you to play new games of blackjack. You're suggesting that, as a casino customer, you could say "you can't shut this table down! I was going to make back my money on the next hand!" which is pretty funny.

I don't think this is at all like a bank that won't let you withdraw your money. I think it's like a brokerage that has to post 100% collateral --- out of their money --- for every share of GME that you ask it to buy, doesn't have the money to post that collateral, and thus can't buy any more GME for you.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#212

Post by andrewflnr »

mancerayder wrote: post #130
andrewflnr wrote: post #19

Who is trying to sue Reddit for this? Bringing them up just sounds like building a case for repealing Section 230 of the DMCA, which would be a disaster but nevertheless seems to have bipartisan support.

I have mixed feelings about this. On the one hand, I'm upset that centralized control led to big tech being able to so easily squash ideological competition (Parler and NY Post, and I am no ally of these, as well as stuff on the left and many individuals), and I want to see some sort of government whip-cracking. On the other hand, if they repeal 230 and everyone is afraid of lawsuits, then you'll see comments disappe…

That doesn't actually sound mixed w.r.t section 230, more like a very clear statement that a different solution is needed.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#213

Post by PartiallyTyped »

jcranmer wrote: post #49
mdorazio wrote: post #5

"It will be hard to prove users suffered as a result of Robinhood’s measures because GameStop and other stocks covered by the curbs fell sharply on Thursday after the restrictions were announced, said James Cox, a professor at Duke Law School." Wait, what? Can anyone legitimately make the claim that the massive drop in value that cut off the price rise at the knees and allowed the worst short positions to cover their…

> Can anyone legitimately make the claim that the massive drop in value that cut off the price rise at the knees and allowed the worst short positions to cover their losses sub-$200 didn't materially harm the users? Very probably. The general principle of Article III jurisprudence is that you have to demonstrate concrete, particularized harm to bring a case, not generalized, theoretical harm. If your allegation is th…

Short Ladder attack during low volume caused by inability to buy.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#214

Post by andrewflnr »

lucasyvas wrote: post #24
andrewflnr wrote: post #19

Who is trying to sue Reddit for this? Bringing them up just sounds like building a case for repealing Section 230 of the DMCA, which would be a disaster but nevertheless seems to have bipartisan support.

I'm all for it at this point - it will push to decentralized infrastructure, which the Internet was meant to be in the first place.

I think this will not go the way you want it to. Powerful interests will certainly portray decentralized communication tools as refuges of terrorists and child predators. They may even succeed in passing legislation that targets them. It will be easier if they're riding high on the momentum of successfully "striking at bad actors, forcing them to flee to other platforms" by repealing 230. "All for it" is a good zinger, but a bad plan.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#215

Post by PartiallyTyped »

LatteLazy wrote: post #112
mdorazio wrote: post #5

"It will be hard to prove users suffered as a result of Robinhood’s measures because GameStop and other stocks covered by the curbs fell sharply on Thursday after the restrictions were announced, said James Cox, a professor at Duke Law School." Wait, what? Can anyone legitimately make the claim that the massive drop in value that cut off the price rise at the knees and allowed the worst short positions to cover their…

Yes, because if they'd bought more they'd have lost money, and RobinHood only stopped them buying. "but we could have driven the price up by cornering the market" I hear RobinHood/WSB users say. Maybe, but that would be illegal market manipulation. So if your case is that you lost out because RobinHood wouldn't facilitate a crime, you have a poor case.

Ladder short attack caused the price to drop during the low volume.

Every time artificial limits were imposed by RH, the price dropped in __all__ the restricted stocks. That is when they restricted shares to 0, or to 2, and subsequently to 1, and again to 0.

On Friday, there were puts expiring and HFs stood to lose a lot, they didn't, and the answer is obvious as to why.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#217

Post by FireBeyond »

loceng wrote: post #31
gruez wrote: post #15

Earlier quoted context omitted.

Probably because those are theoretical losses. The previous paragraph is also relevant: >However, Robinhood is not legally bound to carry out every trade and the lawsuits will not succeed without evidence the company restricted trading for an improper reason, such as to favor certain investors, according to several legal experts. As mentioned in other threads, robinhood wasn't able to come up with the deposit needed…

Favor certain investors - like the ones shorting? This isn't going to be an obvious clear cut case, and there will be plenty of gaslighting as part of the TENS of billions of $ on the line.

And to be clear, the ones shorting _against_ the position _your customers hold_.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#218

Post by pfisch »

tptacek wrote: post #211
pfisch wrote: post #210

Earlier quoted context omitted.

A casino definitely can't shut down a blackjack game in the middle. That is not true. What are you even arguing here? That the purpose of a brokerage is to take customers money and play weird games with it to maximize profits and is allowed to just not have enough money to cover all cash purchases? That is like if a bank just didn't let customers withdraw their money, and kept operating like nothing was wrong. Clearl…

Robinhood stopped allowing you to play new games of blackjack. You're suggesting that, as a casino customer, you could say "you can't shut this table down! I was going to make back my money on the next hand!" which is pretty funny. I don't think this is at all like a bank that won't let you withdraw your money. I think it's like a brokerage that has to post 100% collateral --- out of their money --- for every share o…

No, that analogy doesn't fit. Fully half of robinhood users owned GME stock. They were in the middle of a bet. RH created a situation where the stock could only go down.

"I think it's like a brokerage that has to post 100% collateral --- out of their money"

How is this not the customers money? You deposited 100% of the collateral with RH. Banks can take your money and make loans with it so the bank can make profit, but only so long as they have your money for you when you want to use it.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#219

Post by tgsovlerkhgsel »

protomyth wrote: post #190
jcranmer wrote: post #53

Earlier quoted context omitted.

If I read Robinhood's ToS correctly, you agree to not arbitrate any claim you bring up in a class action lawsuit.

That's actually the problem. Each separate arbitration costs them a bunch of cash. If you run a startup in CA, you might want to look at this language because it could get you in trouble. A class action would probably be cheaper.

And if there is something their current user base is good at, it's coordinated mass action.

So if this is possible, I expect tens of thousands of arbitration cases to be filed by Monday.

Re: Analysis: Robinhood protected from lawsuits by user agreement, Congress

#220

Post by tgsovlerkhgsel »

loceng wrote: post #109
gruez wrote: post #62

Earlier quoted context omitted.

Just because their decision favored another party doesn't mean it was malicious and they would be liable. If at&t had to shut down their network for 2 hours because of a botched firmware update, that would heavily favor the hedge funds (who probably have redundant connections), but that doesn't mean you can go after them for not being able to sell your GME stocks.

The communications records of everyone involved will paint that picture for us, as to whether favours were played or not.

Assuming someone was dumb enough to put any potential shady deal in writing. Wouldn't be the first time, but it requires a special kind of incompetence to do that.
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