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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 c
by 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 agoThat 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 agohttps://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 agoRobinhood 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 agoThat is a real stretch. Plenty of people have lost fortunes on /r/wsb using robinhood without anything of note happening.
- tylerhou 6y agohttps://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 agoAIUI 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 agoSelling 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 agoIf 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 agoActually they halted the opening of new positions. If you have a short position, you can still buy to close.
- scarmig 6y agoFrom 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 agohttps://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 agoAny lawsuit that said "you let me freely trade a stock and I lost money" would be laughed out of court.