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This. If your business is to provide a trading platform, you can't forbid your clients of doing the business they want, with their money. You step in the middle

This. If your business is to provide a trading platform, you can't forbid your clients of doing the business they want, with their money. You step in the middle of the process, you're liable for your interference.

CameronNemo 6y ago
The thing is ... If you don't step in, you could be liable. Let's not pretend that US financial regulation is fairly, evenly, or even logically applied.
- offby37years 6y ago
  Liable for what exactly in this instance?
  - techwizrd 6y ago
    Some folks on WSB may know what they're doing, but many folks are joining Robinhood and buying GME and AMC due to the hype and that they heard they can make a quick buck. When GME eventually crashes, many of them will lose a fair bit of money and blame Robinhood for the poor experience.
    - frmrktTho 6y ago
      This is not a concern specific to gme If Citizens United says money is speech, the financial system effectively has no guard rails Except when it does for the institutions
      - fennecfoxen 6y ago
        You have been reading too many memes. Citizens United does not say money is speech. Citizens United says specifically that when a bunch of people take their money and get together and start a new corporation (Citizens United) (a not-for-profit corporation in this case, though not a charity) and the corporation proceeds to engage in political speech (by filming a movie named Hillary: The Movie)... then the corporation, as an entity, is considered to have the rights like the right to free speech, because it is owned by people who have rights, and this is a way for those people to exercise those rights together. Therefore this political speech is protected by the First Amendment, and restrictions on it are evaluated on the standard of strict scrutiny, and the FEC cannot halt this distribution just because the corporation was using money to make it happen. (You will notice that people are not allowed to band together and exercise the right to vote, and thus corporations don't get to vote.)
      - techwizrd 6y ago
        The financial system has _many_ guard rails including licensure (see the FINRA exams), regulations and regulatory bodies, and orders to halt or limit trades and positions on volatile securities. This concern is relevant to GME, BB, AMC, etc. because folks are joining Robinhood, Webull, and similar apps in record numbers in a rush to jump in on these hyped-up opportunity.
    - exclusiv 6y ago
      And what if their decisions cause it to crash?
    - davidw 6y ago
      I think that both things can be true: people are going to get screwed, and fiddling with the rules in the middle of the game is a really bad look.
      - techwizrd 6y ago
        I'm not arguing either of those (and wholeheartedly agree with you). I'm simply stating a potential concern/justification that Robinhood may have or use.
        davidw 6y ago
        I think this is a reasonable attempt at "what RH did was right", although I'd certainly be happier if the timing and coordinating were brought to light: https://www.bloomberg.com/opinion/articles/2021-01-28/robinhood-s-right-to-save-gamestop-gme-traders-from-themselves https://www.bloomberg.com/opinion/articles/2021-01-28/robinh...
  - Decker87 6y ago
    I think the parent comment is suggesting that the very powerful people in hedge funds could use their power to create severe consequences.
  - purple_ferret 6y ago
    If the stock plummets 90% in minutes are they capable of allowing half their users (the amount that owns GME) to exit their positions? Probably not Go look at past instances of Robinhood going down and the amount of people who claim they're going to take action because of lost money
    - nitrogen 6y ago
      Aren't there circuit breakers that prevent individual stocks from falling that fast?
      - UncleMeat 6y ago
        Aren't we complaining about a kind of circuit breaker here?
        nitrogen 6y ago
        Circuit breakers have clearly defined limits with known actions. This doesn't seem like that.
  - notyourwork 6y ago
    Customers use a trading platform for access to buy and sell on stock markets. If one day you prevent me from doing that but don’t tell me before I sign up when you would restrict my ability to interface with the market it seems like a interference. Platforms are there to enable interface with market, not decide what I can and cannot buy from that markets.
  - dalbasal 6y ago
    Liable to get on the SEC, and industry's bad side. Regulators are (intentionally) designed to be able to exert pressure with a lot of discretion. The financial industry is having a ferocious rage fit. The NASDAQ CEO even went on air calling for immediate SEC regulation... the irony didn't even seem lost to him. Getting on the industry and SEC's bad side is the liability, and that kind of pressure is a big part of hw the SEC actually "regulates." It isn't strictly through rules.
  - CameronNemo 6y ago
    Right now the retail investors are winning. But imagine if they lost tons of money instead. You might have regulators yelling that Robinhood is not doing enough to inform and protect their customers from self harm. Or even that they were encouraging risky behavior.
- vorpalhex 6y ago
  My understanding is that brokerages are generally not liable for what happens on their platform so long as they ensure trades remain legal (eg margin requirements) and they don't make false promises and keep appropriate disclaimers. On the other hand, manipulating the market seems like a good way to lose a business.
- mywittyname 6y ago
  I could see the case if trading for the stock was halted, they'd be liable for the inaction of continuing to allow trades on the platform. But this is straight-up market manipulation. There's no justifiable reason to halt trading on GME except as a means of cooling the market long enough for Important People to exit their bleeding positions. There's a big ass disclaimer that you sign saying that markets fluctuate and that Robinhood isn't liable for losses of capital.
  - tylerhou 6y ago
    The justifiable reason is because if they continue to allow purchases of GME, they might get hit with an even bigger lawsuit from retail. See JumpCrisscross's comments: https://news.ycombinator.com/item?id=25943058 https://news.ycombinator.com/item?id=25943058 Robinhood is stuck between a set of large lawsuits and a set of even bigger lawsuits. It seems like their internal counsel has decided halting trading will lead to the set containing the smaller lawsuits of the two.
    - mywittyname 6y ago
      That sounds like a stretch. You think they are legitimately scared of being successfully sued for "tricking people" into buying through gameification? That looks like CYA-BS from here. If that were a legitimate concern, why wasn't the interface de-gameified long ago?
      - tylerhou 6y ago
        https://www.bloomberg.com/news/articles/2020-12-16/robinhood-accused-of-gamification-by-massachusetts-regulator https://www.bloomberg.com/news/articles/2020-12-16/robinhood...
    - ra7 6y ago
      Robinhood have themselves to blame. They made it dead-easy to trade on margin and do irresponsible naked option plays all these years. And they benefited from that massively in terms of revenue from Citadel (order flow) and raising their own valuation. All of a sudden they care about investor risk?
- csomar 6y ago
  The SEC or the exchange (ie: Nasdaq) should be the one to step in. They are the ones concerned.
  - raducu 6y ago
    Yeah, but all they can do is halt trading for everyone, that's not what Citadel wants. Citadel wants to stop retail investors from buying so they can both buy and sell to themselves and drive the price down and scare retail investors into selling.
- paulddraper 6y ago
  > you could be liable What is a brokerage liable for by doing their job?
xirbeosbwo1234 6y ago
Of course you can. Happens all the time. >with their money With your money. Most people are trading on margin, because they're gambling addicts. EDIT: I'm not sure if it's most that are trading on margin. Certainly it's everyone I've seen, but people who share their trades publicly are probably not representative.
- vorpalhex 6y ago
  Very few retail investors trade on margin as it includes the brokerage holding on to significant amounts of your assets which many small retail investors just don't have.
  - xirbeosbwo1234 6y ago
    It requires $2000 in the case of Robinhood. Reeeeeaaaaallllyyyy onerous.
    - vineyardmike 6y ago
      A lot of the WSB members only invested for a few shares - less than $100. They were doing it for fun not profit. Requiring $2k is a big ask for this crowd of investment
      - xirbeosbwo1234 6y ago
        Then they stand to recover about twenty cents from a lawsuit. Good for them?
- ogre_codes 6y ago
  Robinhood could put a margin freeze on trading these stocks on margin or borrowing against shares of GME. It would protect them and be fair to retail investors.
  - ra7 6y ago
    This is what I don't get. Why do they care if an investor is buying GME shares with their own money? They could easily disable margin trading. I can't point to anything other than blatant manipulation.
newacct583 6y ago
Counterpoint: virtually everyone who would have been buying GME yesterday based on the pump nonsense would have lost all that money. Consumer platforms can likewise be understood to have an obligation to protect their customers from scams, and to the extent they don't they can also be reasonably held liable. Basically: there's a reason for these trading controls to exist. And I really think people here are getting ahead of their skis. Almost everyone screaming about sticking it to Melvin is, as I see it, a victim of a trading scam. Melvin seems to have lost a lot of money, sure, but... so have all the WSB folks. Very, very few people are going to come out of this ahead (and realistically some of those are going to end up in jail).
- bufferoverflow 6y ago
  > virtually everyone who would have been buying GME yesterday based on the pump nonsense would have lost all that money That's not true. Today the stock went higher than at any point yesterday.
  - newacct583 6y ago
    It's already below its open. Edit: multiple responses seizing on what can only be called a conspiracy theory at this point that some how absent Robinhood's tiny trade volume this stock would somehow still be going up from a 500% increase. Guys, YES, the system is kinda rigged. What happened here is that you all GOT SCAMMED. There is no magic short call coming tomorrow. The stock was pumped (starting originally with a short squeeze, but of course now it's just a regular bubble), and you were fooled into trying to buy it high. You are the victims here, not the heroes.
    - martinni 6y ago
      They’ll probably use that argument to justify their action. “See we saved you from yourself, look how low it got”. But who knows what would have happened if the trades weren’t stopped. The system is rigged.
    - elindbe3 6y ago
cmdli 6y ago
Legally speaking, Robinhood is a private entity with no obligations to provide users the ability to trade. Users can still sell or trade their assets out of Robinhood, they just can't open new positions with Robinhood's platform. Users are free to use another platform if they so wish. Not saying its moral or not incredibly corrupt, but I can definitely see Robinhood having the legal equivalent of "our platform, our rules" here.
- csomar 6y ago
  > Legally speaking Do you actually know the rules? Brokers are highly-regulated, and their job is to give a fair trading platform.
  - cmdli 6y ago
    > Do you actually know the rules? Brokers have been doing this for decades; it's clearly within the bounds of what they are allowed to do [0]. Maybe this lawsuit can prove that they are conspiring with hedge funds to manipulate the market (which would be illegal), but just this act alone is not illegal. [0] https://www.cnet.com/personal-finance/robinhood-app-td-ameritrade-restrict-trading-of-gamestop-amc-stock/ https://www.cnet.com/personal-finance/robinhood-app-td-ameri...
    - 93po 6y ago
      Short squeezes happen all the time and RH does absolutely nothing about it. The only time they stepped in was when their partner (Citadel) had an investment in a firm that was losing billions of dollars. I think the burden is on them to prove this wasn't manipulation because it's otherwise so blatant.
- rblatz 6y ago
  Except that it is clearly market manipulation.
- harshalizee 6y ago
  No they don't. All trading platforms are bound by SEC and federal regulations. The terms "broker" and"market maker" aren't slang words. There are strict requirements for platforms who do business under these financial titles.
pyrrhotech 6y ago
Perhaps that's the way a broker should be, but what Robinhood, TD and other brokers did is 100% legal and has been done thousands of times in the past. There's absolutely nothing new or illegal about brokers using their discretion to restrict trading of any stock or asset at any time for any reason.
- dehrmann 6y ago
  With the risky bets Robinhood encourages, this is an interesting time to get a conscious. At lest the WSB crowd sort of knows what they're doing--it's not like the guy who committed suicide.
  - TuringNYC 6y ago
    Spot on. When retail investors were losing their shirts, that was supposedly OK, but now that hedge funds are losing money suddenly there is so much "concern" about retail investors who have made a killing of a profit on the market.
  - babypuncher 6y ago
    I don't think the WSB crowd has a clue what they are doing. They practically turned GME into a ponzi scheme, encouraging more and more people to pump up the price by buying it. It was funny when it was just hedge funds losing millions of dollars because they shorted it, but eventually all the WSB people buying the stock are going to be stuck with something worthless once it inevitably comes back down to Earth. Trading on GME probably should have suspended a while ago. Now we're stuck in a situation where RH has blocked purchases, and people are going to blame them when the stock tanks and they lose their money rather than themselves for buying ridiculously overpriced stock to begin with.
- malandrew 6y ago
  But they didn't restrict the trading of stock. They restricted the buying of stock. People were still able to sell. Blocking only one side of the transactions is blatant market manipulation.
ta1234567890 6y ago
Unfortunately, RH most likely made the decision already taking into account the potential costs of making it (including lawsuits and fines by regulators). Their alternative was probably “biting the hand that feeds them”, hence more likely an existential risk to them. Being cynic about it, nothing of consequence will come out of this. RH will just pay up and continue business as usual. WallStreet will have successfully crushed the little guys, ironically, doing the same they are complaining about, market manipulation. And in the future people will think twice before attempting something like this again.
- martinni 6y ago
  I’m not sure it’s that simple. They pissed off their most loyal and active customers. I doubt they’ll be back. What to say RH will not do this again in the future?
  - ta1234567890 6y ago
    Well, what are people going to do about it? Look at Facebook and Google, they keep abusing their users, but without a good alternative, there’s very little to do about it. Edit: eloquently put by a sibling comment, the issue isn’t having an alternative today, but what would happen when those other alternatives are faced with the same conflict of interest as RH is facing, and the answer is that they would probably react the same way, here’s the link: https://news.ycombinator.com/item?id=25947300 https://news.ycombinator.com/item?id=25947300
    - monadic3 6y ago
      Unlike Google (idk about facebook), there are literally dozens of competitors to robinhood, including mobile trading platforms.
    - vira28 6y ago
      Thread on alternatives to Robinhood. https://news.ycombinator.com/item?id=25946366 https://news.ycombinator.com/item?id=25946366
    - 6y ago
JumpCrisscross 6y ago
They were screwed if they did and screwed if they didn't. If they didn't do anything, the precedent of courts and regulators giving retail investors wins because someone's gameified UI induced them to trade would leave them with untold liability. In this branch of reality, they're going to get sued--and deservedly.
ignoramous 6y ago
Like sama so eloquently put it, "fuck robinhood". https://twitter.com/sama/status/1354842339336835074 https://twitter.com/sama/status/1354842339336835074
betterunix2 6y ago
That would be right if we were talking about a trading platform, but what we are actually talking about is a brokerage. A brokerage places orders on trading platforms on behalf of its customers and brokerages can make various rules about the orders they will or will not place. For example, Robinhood has restricted trading of box spreads for quite a while following an incident of attempted fraud on their platform (which was partially their fault to begin with). Brokerages also have leeway to stop potential crimes they observe their customers committing, which is what happened here. For what it's worth, Robinhood was not the only brokerage that is restricting trading GME. TD Ameritrade, Interactive Brokers, and WeBull also have restrictions in place right now.
- ric2b 6y ago
  At a minimum they should've waited for the market to close before implementing the restriction. The timing of it makes it unethical.

CameronNemo 6y ago

The thing is ... If you don't step in, you could be liable. Let's not pretend that US financial regulation is fairly, evenly, or even logically applied.

offby37years 6y ago
Liable for what exactly in this instance?
- techwizrd 6y ago
  Some folks on WSB may know what they're doing, but many folks are joining Robinhood and buying GME and AMC due to the hype and that they heard they can make a quick buck. When GME eventually crashes, many of them will lose a fair bit of money and blame Robinhood for the poor experience.
  - frmrktTho 6y ago
    This is not a concern specific to gme If Citizens United says money is speech, the financial system effectively has no guard rails Except when it does for the institutions
    - fennecfoxen 6y ago
      You have been reading too many memes. Citizens United does not say money is speech. Citizens United says specifically that when a bunch of people take their money and get together and start a new corporation (Citizens United) (a not-for-profit corporation in this case, though not a charity) and the corporation proceeds to engage in political speech (by filming a movie named Hillary: The Movie)... then the corporation, as an entity, is considered to have the rights like the right to free speech, because it is owned by people who have rights, and this is a way for those people to exercise those rights together. Therefore this political speech is protected by the First Amendment, and restrictions on it are evaluated on the standard of strict scrutiny, and the FEC cannot halt this distribution just because the corporation was using money to make it happen. (You will notice that people are not allowed to band together and exercise the right to vote, and thus corporations don't get to vote.)
    - techwizrd 6y ago
      The financial system has _many_ guard rails including licensure (see the FINRA exams), regulations and regulatory bodies, and orders to halt or limit trades and positions on volatile securities. This concern is relevant to GME, BB, AMC, etc. because folks are joining Robinhood, Webull, and similar apps in record numbers in a rush to jump in on these hyped-up opportunity.
  - exclusiv 6y ago
    And what if their decisions cause it to crash?
  - davidw 6y ago
    I think that both things can be true: people are going to get screwed, and fiddling with the rules in the middle of the game is a really bad look.
    - techwizrd 6y ago
      I'm not arguing either of those (and wholeheartedly agree with you). I'm simply stating a potential concern/justification that Robinhood may have or use.
      - davidw 6y ago
        I think this is a reasonable attempt at "what RH did was right", although I'd certainly be happier if the timing and coordinating were brought to light: https://www.bloomberg.com/opinion/articles/2021-01-28/robinhood-s-right-to-save-gamestop-gme-traders-from-themselves https://www.bloomberg.com/opinion/articles/2021-01-28/robinh...
- Decker87 6y ago
  I think the parent comment is suggesting that the very powerful people in hedge funds could use their power to create severe consequences.
- purple_ferret 6y ago
  If the stock plummets 90% in minutes are they capable of allowing half their users (the amount that owns GME) to exit their positions? Probably not Go look at past instances of Robinhood going down and the amount of people who claim they're going to take action because of lost money
  - nitrogen 6y ago
    Aren't there circuit breakers that prevent individual stocks from falling that fast?
    - UncleMeat 6y ago
      Aren't we complaining about a kind of circuit breaker here?
      - nitrogen 6y ago
        Circuit breakers have clearly defined limits with known actions. This doesn't seem like that.
- notyourwork 6y ago
  Customers use a trading platform for access to buy and sell on stock markets. If one day you prevent me from doing that but don’t tell me before I sign up when you would restrict my ability to interface with the market it seems like a interference. Platforms are there to enable interface with market, not decide what I can and cannot buy from that markets.
- dalbasal 6y ago
  Liable to get on the SEC, and industry's bad side. Regulators are (intentionally) designed to be able to exert pressure with a lot of discretion. The financial industry is having a ferocious rage fit. The NASDAQ CEO even went on air calling for immediate SEC regulation... the irony didn't even seem lost to him. Getting on the industry and SEC's bad side is the liability, and that kind of pressure is a big part of hw the SEC actually "regulates." It isn't strictly through rules.
- CameronNemo 6y ago
  Right now the retail investors are winning. But imagine if they lost tons of money instead. You might have regulators yelling that Robinhood is not doing enough to inform and protect their customers from self harm. Or even that they were encouraging risky behavior.
vorpalhex 6y ago
My understanding is that brokerages are generally not liable for what happens on their platform so long as they ensure trades remain legal (eg margin requirements) and they don't make false promises and keep appropriate disclaimers. On the other hand, manipulating the market seems like a good way to lose a business.
mywittyname 6y ago
I could see the case if trading for the stock was halted, they'd be liable for the inaction of continuing to allow trades on the platform. But this is straight-up market manipulation. There's no justifiable reason to halt trading on GME except as a means of cooling the market long enough for Important People to exit their bleeding positions. There's a big ass disclaimer that you sign saying that markets fluctuate and that Robinhood isn't liable for losses of capital.
- tylerhou 6y ago
  The justifiable reason is because if they continue to allow purchases of GME, they might get hit with an even bigger lawsuit from retail. See JumpCrisscross's comments: https://news.ycombinator.com/item?id=25943058 https://news.ycombinator.com/item?id=25943058 Robinhood is stuck between a set of large lawsuits and a set of even bigger lawsuits. It seems like their internal counsel has decided halting trading will lead to the set containing the smaller lawsuits of the two.
  - mywittyname 6y ago
    That sounds like a stretch. You think they are legitimately scared of being successfully sued for "tricking people" into buying through gameification? That looks like CYA-BS from here. If that were a legitimate concern, why wasn't the interface de-gameified long ago?
    - tylerhou 6y ago
      https://www.bloomberg.com/news/articles/2020-12-16/robinhood-accused-of-gamification-by-massachusetts-regulator https://www.bloomberg.com/news/articles/2020-12-16/robinhood...
  - ra7 6y ago
    Robinhood have themselves to blame. They made it dead-easy to trade on margin and do irresponsible naked option plays all these years. And they benefited from that massively in terms of revenue from Citadel (order flow) and raising their own valuation. All of a sudden they care about investor risk?
csomar 6y ago
The SEC or the exchange (ie: Nasdaq) should be the one to step in. They are the ones concerned.
- raducu 6y ago
  Yeah, but all they can do is halt trading for everyone, that's not what Citadel wants. Citadel wants to stop retail investors from buying so they can both buy and sell to themselves and drive the price down and scare retail investors into selling.
paulddraper 6y ago
> you could be liable What is a brokerage liable for by doing their job?

xirbeosbwo1234 6y ago

Of course you can. Happens all the time. >with their money With your money. Most people are trading on margin, because they're gambling addicts. EDIT: I'm not sure if it's most that are trading on margin. Certainly it's everyone I've seen, but people who share their trades publicly are probably not representative.

vorpalhex 6y ago
Very few retail investors trade on margin as it includes the brokerage holding on to significant amounts of your assets which many small retail investors just don't have.
- xirbeosbwo1234 6y ago
  It requires $2000 in the case of Robinhood. Reeeeeaaaaallllyyyy onerous.
  - vineyardmike 6y ago
    A lot of the WSB members only invested for a few shares - less than $100. They were doing it for fun not profit. Requiring $2k is a big ask for this crowd of investment
    - xirbeosbwo1234 6y ago
      Then they stand to recover about twenty cents from a lawsuit. Good for them?
ogre_codes 6y ago
Robinhood could put a margin freeze on trading these stocks on margin or borrowing against shares of GME. It would protect them and be fair to retail investors.
- ra7 6y ago
  This is what I don't get. Why do they care if an investor is buying GME shares with their own money? They could easily disable margin trading. I can't point to anything other than blatant manipulation.

newacct583 6y ago

Counterpoint: virtually everyone who would have been buying GME yesterday based on the pump nonsense would have lost all that money. Consumer platforms can likewise be understood to have an obligation to protect their customers from scams, and to the extent they don't they can also be reasonably held liable. Basically: there's a reason for these trading controls to exist. And I really think people here are getting ahead of their skis. Almost everyone screaming about sticking it to Melvin is, as I see it, a victim of a trading scam. Melvin seems to have lost a lot of money, sure, but... so have all the WSB folks. Very, very few people are going to come out of this ahead (and realistically some of those are going to end up in jail).

bufferoverflow 6y ago
> virtually everyone who would have been buying GME yesterday based on the pump nonsense would have lost all that money That's not true. Today the stock went higher than at any point yesterday.
- newacct583 6y ago
  It's already below its open. Edit: multiple responses seizing on what can only be called a conspiracy theory at this point that some how absent Robinhood's tiny trade volume this stock would somehow still be going up from a 500% increase. Guys, YES, the system is kinda rigged. What happened here is that you all GOT SCAMMED. There is no magic short call coming tomorrow. The stock was pumped (starting originally with a short squeeze, but of course now it's just a regular bubble), and you were fooled into trying to buy it high. You are the victims here, not the heroes.
  - martinni 6y ago
    They’ll probably use that argument to justify their action. “See we saved you from yourself, look how low it got”. But who knows what would have happened if the trades weren’t stopped. The system is rigged.
  - elindbe3 6y ago

cmdli 6y ago

Legally speaking, Robinhood is a private entity with no obligations to provide users the ability to trade. Users can still sell or trade their assets out of Robinhood, they just can't open new positions with Robinhood's platform. Users are free to use another platform if they so wish. Not saying its moral or not incredibly corrupt, but I can definitely see Robinhood having the legal equivalent of "our platform, our rules" here.

csomar 6y ago
> Legally speaking Do you actually know the rules? Brokers are highly-regulated, and their job is to give a fair trading platform.
- cmdli 6y ago
  > Do you actually know the rules? Brokers have been doing this for decades; it's clearly within the bounds of what they are allowed to do [0]. Maybe this lawsuit can prove that they are conspiring with hedge funds to manipulate the market (which would be illegal), but just this act alone is not illegal. [0] https://www.cnet.com/personal-finance/robinhood-app-td-ameritrade-restrict-trading-of-gamestop-amc-stock/ https://www.cnet.com/personal-finance/robinhood-app-td-ameri...
  - 93po 6y ago
    Short squeezes happen all the time and RH does absolutely nothing about it. The only time they stepped in was when their partner (Citadel) had an investment in a firm that was losing billions of dollars. I think the burden is on them to prove this wasn't manipulation because it's otherwise so blatant.
rblatz 6y ago
Except that it is clearly market manipulation.
harshalizee 6y ago
No they don't. All trading platforms are bound by SEC and federal regulations. The terms "broker" and"market maker" aren't slang words. There are strict requirements for platforms who do business under these financial titles.

pyrrhotech 6y ago

Perhaps that's the way a broker should be, but what Robinhood, TD and other brokers did is 100% legal and has been done thousands of times in the past. There's absolutely nothing new or illegal about brokers using their discretion to restrict trading of any stock or asset at any time for any reason.

dehrmann 6y ago
With the risky bets Robinhood encourages, this is an interesting time to get a conscious. At lest the WSB crowd sort of knows what they're doing--it's not like the guy who committed suicide.
- TuringNYC 6y ago
  Spot on. When retail investors were losing their shirts, that was supposedly OK, but now that hedge funds are losing money suddenly there is so much "concern" about retail investors who have made a killing of a profit on the market.
- babypuncher 6y ago
  I don't think the WSB crowd has a clue what they are doing. They practically turned GME into a ponzi scheme, encouraging more and more people to pump up the price by buying it. It was funny when it was just hedge funds losing millions of dollars because they shorted it, but eventually all the WSB people buying the stock are going to be stuck with something worthless once it inevitably comes back down to Earth. Trading on GME probably should have suspended a while ago. Now we're stuck in a situation where RH has blocked purchases, and people are going to blame them when the stock tanks and they lose their money rather than themselves for buying ridiculously overpriced stock to begin with.
malandrew 6y ago
But they didn't restrict the trading of stock. They restricted the buying of stock. People were still able to sell. Blocking only one side of the transactions is blatant market manipulation.

ta1234567890 6y ago

Unfortunately, RH most likely made the decision already taking into account the potential costs of making it (including lawsuits and fines by regulators). Their alternative was probably “biting the hand that feeds them”, hence more likely an existential risk to them. Being cynic about it, nothing of consequence will come out of this. RH will just pay up and continue business as usual. WallStreet will have successfully crushed the little guys, ironically, doing the same they are complaining about, market manipulation. And in the future people will think twice before attempting something like this again.

martinni 6y ago
I’m not sure it’s that simple. They pissed off their most loyal and active customers. I doubt they’ll be back. What to say RH will not do this again in the future?
- ta1234567890 6y ago
  Well, what are people going to do about it? Look at Facebook and Google, they keep abusing their users, but without a good alternative, there’s very little to do about it. Edit: eloquently put by a sibling comment, the issue isn’t having an alternative today, but what would happen when those other alternatives are faced with the same conflict of interest as RH is facing, and the answer is that they would probably react the same way, here’s the link: https://news.ycombinator.com/item?id=25947300 https://news.ycombinator.com/item?id=25947300
  - monadic3 6y ago
    Unlike Google (idk about facebook), there are literally dozens of competitors to robinhood, including mobile trading platforms.
  - vira28 6y ago
    Thread on alternatives to Robinhood. https://news.ycombinator.com/item?id=25946366 https://news.ycombinator.com/item?id=25946366
  - 6y ago

JumpCrisscross 6y ago

They were screwed if they did and screwed if they didn't. If they didn't do anything, the precedent of courts and regulators giving retail investors wins because someone's gameified UI induced them to trade would leave them with untold liability. In this branch of reality, they're going to get sued--and deservedly.

ignoramous 6y ago

Like sama so eloquently put it, "fuck robinhood". https://twitter.com/sama/status/1354842339336835074 https://twitter.com/sama/status/1354842339336835074

betterunix2 6y ago

That would be right if we were talking about a trading platform, but what we are actually talking about is a brokerage. A brokerage places orders on trading platforms on behalf of its customers and brokerages can make various rules about the orders they will or will not place. For example, Robinhood has restricted trading of box spreads for quite a while following an incident of attempted fraud on their platform (which was partially their fault to begin with). Brokerages also have leeway to stop potential crimes they observe their customers committing, which is what happened here. For what it's worth, Robinhood was not the only brokerage that is restricting trading GME. TD Ameritrade, Interactive Brokers, and WeBull also have restrictions in place right now.

ric2b 6y ago
At a minimum they should've waited for the market to close before implementing the restriction. The timing of it makes it unethical.