Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Analysis: Robinhood protected from lawsuits by user agreement, Congress

reuters.com

Post reply on HN
Print view View original

31–40 of 293 posts

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

#31

Post by loceng »

gruez wrote: post #15
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…

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.

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

#32

Post by bmitc »

gruez wrote: post #15
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…

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…

But there is the possibility that Robinhood was also cutting trading to appease Citadel, who to my understanding, just happened to re-engage their short positions right before Robinhood cut buying to Gamestop stock.

If the story about Robinhood running out of money is true, why wouldn't they just ban buying on margin and not all buying? I don't understand that.

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

#33

Post by malwarebytess »

kleton wrote: post #7
ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

Each FINRA arbitration case would be expected to cost the company up to 10,000 in fees. If anywhere near the 100,000 users who left negative reviews on the Google Play store for the app file an arbitration and pay the filing fee, Robinhood will absolutely go bankrupt. If you are/were a Robinhood user: https://www.finra.org/arbitration-mediation/initiate-arbitra...

I think there's a very good chance the reviews were not organic, but instead automated.

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

#34

Post by Anon1096 »

Alex3917 wrote: post #23
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…

> As mentioned in other threads, robinhood wasn't able to come up with the deposit needed for their customers trades. That's not true, they only blocked trades on those specific stocks. If it was really a liquidity issue then they could have rate limited all trades equally regardless of the stock in question.

The deposit requirements on those stocks were increased from 2% to 100%.

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

#36

Post by vertis »

gruez wrote: post #27
vertis wrote: post #25

Earlier quoted context omitted.

I don't have a Robinhood account, and I'm not involved in the GME/WSB stuff, but I would think twice about opening a Robinhood account now. Indeed, it's been educational about which brokers are using other clearing houses (sorry if I get the terminology wrong), and which are direct. But then badly behaved businesses like Godaddy don't seem to suffer or go out of business, so I suspect Robinhood won't have too many lo…

>Indeed, it's been educational about which brokers are using other clearing houses (sorry if I get the terminology wrong), and which are direct. Wait what? Is there a list somewhere? AFAIK interactive brokers (which doesn't engage in PFOF) also shut down trading.

Yes, this[1] was the one that I found when searching. It shows that Robinhood is it's own, but as we know they route to Citadel.

A bunch of others had a problem when Apex Holdings told them to restrict trading (or something along those lines).

[1]: https://investorjunkie.com/stock-brokers/broker-clearing-fir...

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

#37

Post by toomuchtodo »

malwarebytess wrote: post #33
kleton wrote: post #7

Earlier quoted context omitted.

Each FINRA arbitration case would be expected to cost the company up to 10,000 in fees. If anywhere near the 100,000 users who left negative reviews on the Google Play store for the app file an arbitration and pay the filing fee, Robinhood will absolutely go bankrupt. If you are/were a Robinhood user: https://www.finra.org/arbitration-mediation/initiate-arbitra...

I think there's a very good chance the reviews were not organic, but instead automated.

You can automate arbitration filings for users just as easily. Can’t wipe away 100k arbitration requests as easily as the same amount of negative reviews.

I’d even contribute financially to have such an app built, because if FINRA and the SEC won't act (no surprise!), citizens can and should.

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

#38

Post by mdoms »

malwarebytess wrote: post #33
kleton wrote: post #7

Earlier quoted context omitted.

Each FINRA arbitration case would be expected to cost the company up to 10,000 in fees. If anywhere near the 100,000 users who left negative reviews on the Google Play store for the app file an arbitration and pay the filing fee, Robinhood will absolutely go bankrupt. If you are/were a Robinhood user: https://www.finra.org/arbitration-mediation/initiate-arbitra...

I think there's a very good chance the reviews were not organic, but instead automated.

Got any evidence for that?

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

#39

Post by iaabtpbtpnn »

hehehaha wrote: post #21
ericmay wrote: post #4

Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users. Even if they just weren’t prepared and everything they did was legitimately the right thing to do, that ship has sailed. I know people I didn’t even know had a Robinhood account ask me if I was shutting my account down too. This will be fascinating to watch. Can the repair the brand damage? I’m skeptical. Is there any similar scenari…

To be honest, people will eventually return. RH is the cost leader by a wide margin and its very unique to its business model via data arrangement with Citadel. In aggregate, total savings they pass down to retail traders is in the billions. With options trading at all time high, savings for 2020 was likely in tens of billions. Edit: upon looking at some aggregate data via OCC, appears I overestimated savings.

What costs are they leading in? Stock, ETF, and mutual fund trades cost nothing on all the major platforms. (Maybe not options, but most people shouldn't be trading options, as they all just learned.)

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

#40

Post by gruez »

Alex3917 wrote: post #23
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…

> As mentioned in other threads, robinhood wasn't able to come up with the deposit needed for their customers trades. That's not true, they only blocked trades on those specific stocks. If it was really a liquidity issue then they could have rate limited all trades equally regardless of the stock in question.

Not really, because the amount of deposit you need to put up is proportional to the volatility, among other factors. Therefore it makes sense to shut down trading for the stocks that incur a disproportionately high amount of deposit requirements for them. I guess it's possible for them to say "fuck it" and let everything trade until they run out of money, but I don't think they have an obligation to do that.
Post reply on HN