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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

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?
- safog 6y ago
  That is a real stretch. Plenty of people have lost fortunes on /r/wsb using robinhood without anything of note happening.
  - 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...
- M2Ys4U 6y ago
  AIUI Robinhood has halted buying shares and options, but they haven't halted selling. If it was purely a halt on all trading I could see the logic, but only preventing people from buying seems fishy to me. (I'm not involved one way or the other; I don't trade shares at all)
  - tylerhou 6y ago
    Selling is important because it lets people close out their positions as they need to. If Robinhood halted all trading they would have a huge mess à la the complete shutdown back in March. Buying exposes them to additional risk in the form of potential future lawsuits.
  - nrmitchi 6y ago
    If they halted selling you know as well as I do that there would have been an immediate "Robinhood is holding my money hostage! They didn't let me sell and the price dropped, so they are responsible for my losses" lawsuit. Which, lets be honest, would have more merit than a "I missed out potential gains" lawsuit.
  - betterunix2 6y ago
    Actually they halted the opening of new positions. If you have a short position, you can still buy to close.
- scarmig 6y ago
  From the comment: > If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable This seems like an attempt to pass the buck to FINRA, and I'm fairly skeptical, but open to being convinced. Have there been FINRA complaints that resulted in substantive enforcement actions centered on a broker's gamified user interface?
  - 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...
- llampx 6y ago
  Any lawsuit that said "you let me freely trade a stock and I lost money" would be laughed out of court.
ashtonkem 6y ago
It’s not that unusual for exchanges to call a halt on certain instruments when they’re overheated, fyi.
- FireBeyond 6y ago
  The exchange hasn't done anything, though. It's only certain retail brokers, and, mystifyingly, mostly the ones who have hedge funds with significant ownership interests.
  - ashtonkem 6y ago
    Yeah, that’s clearly problematic. I’m no fan of WSB, but it sure as hell looks like Robinhood has done something very bad here. But the general case of “the market should never interfere with trading” isn’t true, but typically we only allow that at the exchange level.
- mcherm 6y ago
  No, it's not unusual. And, in fact, the exchanges HAVE used brief halts in trading to curb volatility in GameStop stock. But those were done in accordance with standard policies that simply reference a certain amount of change within a certain timeframe. What Robinhood has done is apparently to ALLOW trading, but only selling, not buying. At a time when a close partner of theirs is at significant risk if the stock price goes up.

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?
safog 6y ago
That is a real stretch. Plenty of people have lost fortunes on /r/wsb using robinhood without anything of note happening.
- 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...
M2Ys4U 6y ago
AIUI Robinhood has halted buying shares and options, but they haven't halted selling. If it was purely a halt on all trading I could see the logic, but only preventing people from buying seems fishy to me. (I'm not involved one way or the other; I don't trade shares at all)
- tylerhou 6y ago
  Selling is important because it lets people close out their positions as they need to. If Robinhood halted all trading they would have a huge mess à la the complete shutdown back in March. Buying exposes them to additional risk in the form of potential future lawsuits.
- nrmitchi 6y ago
  If they halted selling you know as well as I do that there would have been an immediate "Robinhood is holding my money hostage! They didn't let me sell and the price dropped, so they are responsible for my losses" lawsuit. Which, lets be honest, would have more merit than a "I missed out potential gains" lawsuit.
- betterunix2 6y ago
  Actually they halted the opening of new positions. If you have a short position, you can still buy to close.
scarmig 6y ago
From the comment: > If a retail customer loses money and makes a FINRA complaint that Robinhood induced them to buy through its gameified interface, it is liable This seems like an attempt to pass the buck to FINRA, and I'm fairly skeptical, but open to being convinced. Have there been FINRA complaints that resulted in substantive enforcement actions centered on a broker's gamified user interface?
- 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...
llampx 6y ago
Any lawsuit that said "you let me freely trade a stock and I lost money" would be laughed out of court.

ashtonkem 6y ago

It’s not that unusual for exchanges to call a halt on certain instruments when they’re overheated, fyi.

FireBeyond 6y ago
The exchange hasn't done anything, though. It's only certain retail brokers, and, mystifyingly, mostly the ones who have hedge funds with significant ownership interests.
- ashtonkem 6y ago
  Yeah, that’s clearly problematic. I’m no fan of WSB, but it sure as hell looks like Robinhood has done something very bad here. But the general case of “the market should never interfere with trading” isn’t true, but typically we only allow that at the exchange level.
mcherm 6y ago
No, it's not unusual. And, in fact, the exchanges HAVE used brief halts in trading to curb volatility in GameStop stock. But those were done in accordance with standard policies that simply reference a certain amount of change within a certain timeframe. What Robinhood has done is apparently to ALLOW trading, but only selling, not buying. At a time when a close partner of theirs is at significant risk if the stock price goes up.