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Not trying to defend Robinhood here, but it would probably go like this: Robinhood is a private service and potentially has liability from what it enables users
by cmdli 6y ago
Not trying to defend Robinhood here, but it would probably go like this: Robinhood is a private service and potentially has liability from what it enables users to do. They are under no obligation to provide trades on specific stocks, and if users want to trade that specific stock then they are free to use a different service. Users can sell/trade their assets out of the Robinhood service if they are unhappy with the current state of affairs.
Of course, the users are free to file any lawsuits they wish. Saying "the game is rigged and its unfair" isn't exactly a legal argument, though.
- TameAntelope 6y agoI'm curious what relevance Section 230 has here. That is, would Robinhood (and Reddit) be concerned that allowing users to execute a market manipulation attempt expose the platform to legal trouble, or are they protected by Section 230 (up to the point where the SEC asks them to do something specifically)? This feels like another example of, "Their house, their rules." You don't have to use Robinhood to trade on the NYSE, so the question becomes, "Couldn't these users execute these trades elsewhere?"
- tourist_ 6y agoI am not a U.S. person, but isn't/shouldn't there be a set of rules for the provider of a brokerage account. Sure, its their house, their rules, but how can they change the rules overnight? If what Robinhood did isn't illegal, then I suppose I had the wrong impression about the strength of financial regulations in the U.S. (If this happened in my home country, I would never participate in the markets again.)
- TameAntelope 6y agoI think what we're finding out now is that this happened as a result of the strength of financial regulations/safety systems in place in the US markets. Volatility increases risk, and higher risk requires higher levels of safety to operate properly, and Robinhood couldn't provide the higher level of safety, so they were given no choice by the people who actually execute their trades. In the coming days, more information will add context that, I expect, will make the populist outrage look foolish/uninformed. In many ways, we're already there.
- SnowingXIV 6y agoThere is a timing issue at play too, even if that's true. Say you wanted to migrate off elsewhere - it could take days for funds to settle between selling -> buying on another brokerage. By that time they possibly could have covered the shorts.
- aeternum 6y ago>Couldn't these users execute these trades elsewhere Not really, it takes days to withdraw money.
- devindotcom 6y agoReddit is almost certainly covered by 230 in this instance. RH is a tougher question, but I'd argue they are probably fine. If either has liability (particularly RH) it will be under other laws or rules.