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I know everyone is excited to bring out their pitchforks, but let's take a moment to consider this from an objective position. Imagine a broker knowingly profi
by floor2 6y ago
I know everyone is excited to bring out their pitchforks, but let's take a moment to consider this from an objective position.
Imagine a broker knowingly profits from executing trades that are part of a market manipulation- the SEC can and does come after them with huge fines. Usually it's years later in the unwinding of some shady hedge fund or corrupt sovereign wealth fund or pump&dump operation.
In this case, it's not a boiler room in New Jersey or a Malaysian government insider manipulating the market, it's a bunch of different people on twitter and reddit. It seems perfectly reasonable that the brokerage firms who are complicit in this have legitimate fears that the SEC will come after them later, and so are trying to limit the risk that they're deemed culpable.
- N1H1L 6y agoI agree with Robinhood's fears on principle. What however riles up people (legitimately IMO) is that larger funds making equally suspect trades are basically let off with a slap on the wrist. A strong argument could be made that Tesla's stocks last year have been pumped up irrationally by funds last year too, and if a market correction comes the funds behind it will face zero to minimal consequences. Same in 2008. At the end of the day, the differential rules for individual traders and big funds riles people up.
- piva00 6y agoHow could they be liable though? This is a black swan, there were no risk models predicting this, Robinhood probably didn't have a policy for market manipulation done in a decentralised and diffuse way, probably because it was never done. It's really hard to objectively defend Robinhood, it's not their job to be the gatekeeper for millions of small fish trading some peanuts. It's quite patronising.