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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

#91

Post by almost_usual »

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…

> Robinhood won’t go out of business because of lawsuits, it’ll be an exodus of users.

I would imagine most users care more about money and convenience than principles. I doubt they lose many users in the long run.

If the bubble or market crashes though they will lose a large user base for a long period of time.

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

#92

Post by newacct583 »

Daho0n wrote: post #69
newacct583 wrote: post #54

Earlier quoted context omitted.

> 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? Yes, because you'd have to prove that Robinhood volume alone caused that drop in price. Robinhood isn't that big, and GME volume was crazy on Thursday. It's equally likely (and equally impossible to prove…

Let's see in a few months if it were the peak. I doubt that very much and my money is on it.

I say this with genuine love in my heart, and hoping dearly for you to see this more clearly: you got scammed. Those early short positions[1] are closed out, losses have been taken, GME is going to burble along for a bit as the people who scammed you exit their own positions and then it's going to crash back down to $80 or less. It is no longer a short squeeze, this is a speculative bubble sustained by people like you who were lied to about it being a short squeeze.

[1] Obviously people are taking out new shorts like crazy on this stock given the bubble.

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

#93

Post by pmichaud »

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…

I know nothing, so here's a question: instead of framing it like the concrete harm was lack of profit (which is theoretical), could they frame it as the concrete harm being that robinhood turned the situation from potentially profitable to no chance of profit?

Like if I'm fishing, I might not catch a fish that day, but if you collapse the pier I'm fishing from then you've concretely caused particular harm to my chances of catching a fish?

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

#94

Post by stevespang »

One strategy that 1st year law students are all aware of:

ANY contract that is one sided, where ALL participants are not allowed to participate in negotiating the contract - - and especially without all sides being represented by an attorney - - are known as UNCONSCIONABLE, and prone to be set aside in court. (without good conscious, or predatory).

All these High Tech TOS's meet that standard of UNCONSCIONABLE

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

#95

Post by bmitc »

elliekelly wrote: post #46
bmitc wrote: post #32

Earlier quoted context omitted.

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.

> 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. Because DTCC requires cash collateral while the transaction is settled whether the transaction happens in a margin account or a cash account. There's no distinction from DTCC's perspective. DTCC (reportedly) increased the collateral on $GME transactions to 100% of the t…

Thanks for that information. I didn’t know that or about DTCC. Is raising the collateral on transactions like that typical?

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

#96

Post by LegitShady »

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 liquidity claim on tv was never supported and was later retracted. David Portnoy also called it out directly as well. Liquidity was not the reason for Robin hoods actions.

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

#97

Post by nceqs3 »

awillen wrote: post #57

Why can't non-Robinhood holders of GME sue Robinhood, though? If you can prove that RH's actions drove the stock down, then aren't they the victims (and also not bound by the user agreement)?

Everything is securities fraud - Matt Levine

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

#99

Post by mrep »

elliekelly wrote: post #58
csmiller wrote: post #43

Earlier quoted context omitted.

What are the switching costs? Seems fairly trivial to move assets between brokerages.

RH charges $75 to transfer holdings to a different broker. If you have a big account that's probably worthwhile but I get the impression a lot of RH customers are small-time people who are just dabbling in the stock market for fun. If your account only holds $500-1000 of securities a $75 fee is pretty steep.

Or you know, just don't open any new positions there and transfer your funds back to your account once you have closed the rest like I did. Then you have nothing there, can deactivate your account and just open an account at another place.

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

#100

Post by boatsie »

ummonk wrote: post #63
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…

Their messaging around this has been a total self-own. I don't know whether they're trying to protect their relationship with the DTCC or something else, but Vlad's lack of clarity understandably makes most people blame RobinHood.

I don’t know Vlad’s background but is it possible he doesn’t understand the exact details?
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