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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

#281

Post by PartiallyTyped »

ycombobreaker wrote: post #256
PartiallyTyped wrote: post #215

Earlier quoted context omitted.

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.

Everything I can find online about this "ladder short attack" points to the GME activity. Does anybody have any explanation for this that predates the last week? This is not the first short squeeze, nor the first outage for retail traders during a volatile period. The only explanation I see on reddit refers to hedge funds lowering their bids, which isn't sufficient to explain the market actually dropping (there were…

Here are some explanations directly taken from WSB.

https://www.reddit.com/r/wallstreetbets/comments/l9auf5/impo...

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

#282

Post by zenexer »

woah wrote: post #270
zenexer wrote: post #268

Earlier quoted context omitted.

It’s currently being widely reported that RH actively closed users’ positions without their permission and refused to let them cancel the trades. While I can’t personally vouch for this being true, if it is, I would expect that’s a little different from “refusal to execute orders.” (As always, take these anecdotes with a grain of salt: even if widely reported, it could very well be untrue.)

Those were instances of margin trading. That’s how margin works. If your position is too risky, the people you are borrowing money from can close it out.

The claims were that they were not margin trading. That’s what made them unique.

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

#283

Post by WaldoLydecker »

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…

It’s the specific users who couldn’t make trades who would need to show damage in the action under discussion. Not the wider world.

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

#284

Post by ycombobreaker »

PartiallyTyped wrote: post #276
ycombobreaker wrote: post #256

Earlier quoted context omitted.

Everything I can find online about this "ladder short attack" points to the GME activity. Does anybody have any explanation for this that predates the last week? This is not the first short squeeze, nor the first outage for retail traders during a volatile period. The only explanation I see on reddit refers to hedge funds lowering their bids, which isn't sufficient to explain the market actually dropping (there were…

During the duration of restricted flow there were 800K shares sold at $120 and $140 in two batches on Thursday, significantly lower than the market price, infact, whoever sold them got sold them at 300M less than market value. This sudden drop caused the price to fall and trigger stop losses. This happened before.

During this period (looks like at least 10:30-noon ET) there were 11 volatility halts (and auction-priced reopenings) due to price movement. The stock spent more time halted than open!

Reopening auctions concentrate trading volumes. This may look more suspicious because volume is so concentrated, but in reality they give about five minutes for many participants to join and it all executes at one price. Prices I see for reopenings are approximately

330 290 265 226 170 140 120 141 170 210 216

The idea that the 120,140 were lower than "market prices" is solidly in tail-wagging-dog category. GME sold off hard, yes, but it was over the course of almost an hour and with substantial trading across the entire price range. This is natural when any imbalanced order flow has previously pushed prices and then subsides.

Note that 120 was the low and prices retraced through about half of the prior range. That retracement started at around 11:20 ET. Do you know when RH or other brokers had opening buy orders blocked and subsequently unblocked? Given that RH needed to secure cash for DTCC'S requirements, I expect that retracement was during the blocked period still.

Overall this still looks like tinfoil hat theory from WSB. Volatility looks crazy and it's easy to see demons in the shadows.

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

#285

Post by ycombobreaker »

PartiallyTyped wrote: post #281
ycombobreaker wrote: post #256

Earlier quoted context omitted.

Everything I can find online about this "ladder short attack" points to the GME activity. Does anybody have any explanation for this that predates the last week? This is not the first short squeeze, nor the first outage for retail traders during a volatile period. The only explanation I see on reddit refers to hedge funds lowering their bids, which isn't sufficient to explain the market actually dropping (there were…

Here are some explanations directly taken from WSB. https://www.reddit.com/r/wallstreetbets/comments/l9auf5/impo...

Thank you for linking this. IMHO the reddit thread is useless (I'm looking for older evidence of this term) but the linked post from seekingalpha is from 2014:

https://seekingalpha-com.cdn.ampproject.org/v/s/seekingalpha...

The description of a short ladder attack from 2014 strongly implies that the short party is attemping to manipulate a stock from its prevailing fundamental value. There is a key difference in that GME's fundamental value is nowhere near the $300+ range that it was trading it on Thursday!

There need not be a misinformation campaign or "attack" for well-capitalized fundamental traders to see opportunity to sell into this. Especially after seeing the capital crunch nailing retail brokers.

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

#286

Post by jjeaff »

chii wrote: post #265
tgsovlerkhgsel wrote: post #219

Earlier quoted context omitted.

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.

I hope that happens. Corporations cannot, and should not be able to TOS their liabilities away.

I agree somewhat. But I think your ability to TOS away your liabilities is greatly increased when your service is free.

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

#287

Post by LatteLazy »

oblio wrote: post #279
LatteLazy wrote: post #117

Earlier quoted context omitted.

I don't necessarily support forced arbitration but... I would rather not pay the court fees because a bunch of people are upset their broker didn't accept their orders and want to waste the courts time over it.

> I would rather not pay the court fees because a bunch of people are upset their broker didn't accept their orders and want to waste the courts time over it. I like how you trivialize it. Didn't they lose a ton of money, potentially their savings, because "their broker didn't accept their orders"? Repeat that several times in your head, how does it sound?

You're right that I'm trivialising it, and everyone has a right to a hearing.

This case will be a waste of time though.

The broker has to offer best efforts, but if something goes wrong and they can't execute the order then that's tough.

Even if that weren't true, this case hinges on whether those orders would have driven the price up (it didn't move much either way AFAIK). So to make the case, the class have to collectively admit to market manipulation. RobinHood stopping them was like a taxi driver refusing to drive robbers to the bank, the robbers don't get to sue when their dastardly plot is foiled! Or they can sue, but they'll lose and open themselves up further to prosecution!

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

#288

Post by OldHand2018 »

_trampeltier wrote: post #277
OldHand2018 wrote: post #266

Earlier quoted context omitted.

Stock trading kind of skyrocketed in the late 1960s. It got to the point where the NYSE had to close on Wednesdays just to catch up with the all the trading paperwork from Monday and Tuesday (Thursday and Friday was handled over the weekend). This led to brokerages buying computers to start to manage everything, just in time for trading volume to crash around 1970 and brokerages going bankrupt left and right because…

Is there a good source for the technical history about exchanges? Would love to know more about it.

I am unaware of one, but would also find it interesting. If you know about an event, you can usually search and find some more information about it.

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

#289

Post by alasdair_ »

tptacek wrote: post #203
alasdair_ wrote: post #105

Earlier quoted context omitted.

Robinhood sends their order flow to Citadel. Citadel would know before anybody else in the market that the massive number of buy orders from RH had just gone to zero. They would also know that sell orders were still coming in. This would allow Citadel to profit massively on the backs of the RH customers even if there was no direct collusion. The thing is, RH isn’t stupid. They knew that Citadel (their biggest custome…

This doesn't make much sense. One way Citadel could have known there was a massive number of buy orders would be to simply read WSB.

WSB didn’t know about RH buy orders going to zero for everyone until at least half an hour after it happened. Citadel knew before anyone else on the market and could act accordingly to short.

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

#290

Post by eight2inf »

ycombobreaker wrote: post #256
PartiallyTyped wrote: post #215

Earlier quoted context omitted.

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.

Everything I can find online about this "ladder short attack" points to the GME activity. Does anybody have any explanation for this that predates the last week? This is not the first short squeeze, nor the first outage for retail traders during a volatile period. The only explanation I see on reddit refers to hedge funds lowering their bids, which isn't sufficient to explain the market actually dropping (there were…

2014 do you guys even know how to DuckDuckGo? https://seekingalpha.com/instablog/11442671-gerald-klein/309...
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