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If you know the risk, and can afford the loss, you can use a different platform, no? This action is likely (at least partially) targeted to prevent new users w

If you know the risk, and can afford the loss, you can use a different platform, no? This action is likely (at least partially) targeted to prevent new users who have never traded a stock from trying to hop on the train and follow a "How to buy GME Options to make BANK in 5 simple steps!" article from losing everything. Do you think there would be less blow-back if Robinhood only restricted new accounts? Or maybe only people with minimum balances? If they stopped allowing people to sell their existing positions, then a lawsuit about "Robinhood is holding my funds hostage, didn't let me sell, and now I lost money because of them" would have come in, and probably would have had a lot more merit.

unethical_ban 6y ago
We are working on fundamentally different assumptions. You assume they did this in good faith to "protect new users". I believe they are committing fraud and stock manipulation. But yes, if I used your assumption, I would say they should have restricted options for new users, or put extra warnings up. And to your first sentence, no, you can't just move to a new platform. It takes more than a week to move funds from one brokerage to another.
- newacct583 6y ago
  > I believe they are committing fraud and stock manipulation. The stock is already manipulated, though. No one racing to buy GME is doing so because a genuine desire to receive dividends, exercise voting power over corporate governance, etc... They're doing it because they read on wallstreetbets that a magical "short call" was coming tomorrow which would spike the stock. That's a SCAM. It's not going to happen that way. The owners of all those early shorts have already settled their positions (and, yes, lost a lot of money in the process) and all you're seeing now is a tulip-style pump and dump. You got scammed. You're not a hero. Robinhood might well not be acting in your best interests but they almost certainly saved you money.
  - unethical_ban 6y ago
    You are factually incorrect. The users on WSB used publicly available data to see that the shorting was occurring. They did what "the pros" constantly do, which is pool resources and make moves collectively. That is not "manipulation" in the legal form of the word. Not like shutting down trading, in one direction only, for retail only. Since it is individual users on a public forum winning, instead of the guild of hedge fund bros, the power player (Citadel) is forcing the shutdown. Whether or not pumped up stocks are wise is irrelevant. The fact that something that happens constantly gets axed because the wrong people are winning is the issue.
- nrmitchi 6y ago
  Yes, I am 100% assuming that Robinhood is acting is "good faith" (the fact that I'm defending Robinhood feels gross to me). If Robinhood just wanted to make money, they would have let this continue. People like to complain that RH gets payment for order flow, but they just knowingly cut off that order flow. It feels like Occam's Razor should apply here. Either: 1. Robinhood felt that it's long term prospects were better if it's users weren't able to gamble and most likely lose all of their money, thus being scared away from the stock market forever. 2. There is a secret cobal that Robinhood, who was previous the "bad guy" of the financial world, is now in and tricked it's users into buying a stock that would be worthless just so that Robinhood could shut of trading at the peak, and let their secret hedge-fund buddies make a ton of money. I'm not inclined to believe the conspiracy theory when there is a more more reasonable option.
  - unethical_ban 6y ago
    The same firm, Citadel, that fills much of RH's orders is the firm that propped up Melvin Capital (the group that shorted GME and needed a bailout). Option 3: The cabal is there, it isn't secret, and they were on the hook to lose so much money that it was cheaper to essentially sacrifice the RH brand than to let the short get fucked to infinity. Edit: They have stated on a blog post that this was a risk management move on their part - not strictly in the interest of the customer. The market is broken.

unethical_ban 6y ago

We are working on fundamentally different assumptions. You assume they did this in good faith to "protect new users". I believe they are committing fraud and stock manipulation. But yes, if I used your assumption, I would say they should have restricted options for new users, or put extra warnings up. And to your first sentence, no, you can't just move to a new platform. It takes more than a week to move funds from one brokerage to another.

newacct583 6y ago
> I believe they are committing fraud and stock manipulation. The stock is already manipulated, though. No one racing to buy GME is doing so because a genuine desire to receive dividends, exercise voting power over corporate governance, etc... They're doing it because they read on wallstreetbets that a magical "short call" was coming tomorrow which would spike the stock. That's a SCAM. It's not going to happen that way. The owners of all those early shorts have already settled their positions (and, yes, lost a lot of money in the process) and all you're seeing now is a tulip-style pump and dump. You got scammed. You're not a hero. Robinhood might well not be acting in your best interests but they almost certainly saved you money.
- unethical_ban 6y ago
  You are factually incorrect. The users on WSB used publicly available data to see that the shorting was occurring. They did what "the pros" constantly do, which is pool resources and make moves collectively. That is not "manipulation" in the legal form of the word. Not like shutting down trading, in one direction only, for retail only. Since it is individual users on a public forum winning, instead of the guild of hedge fund bros, the power player (Citadel) is forcing the shutdown. Whether or not pumped up stocks are wise is irrelevant. The fact that something that happens constantly gets axed because the wrong people are winning is the issue.
nrmitchi 6y ago
Yes, I am 100% assuming that Robinhood is acting is "good faith" (the fact that I'm defending Robinhood feels gross to me). If Robinhood just wanted to make money, they would have let this continue. People like to complain that RH gets payment for order flow, but they just knowingly cut off that order flow. It feels like Occam's Razor should apply here. Either: 1. Robinhood felt that it's long term prospects were better if it's users weren't able to gamble and most likely lose all of their money, thus being scared away from the stock market forever. 2. There is a secret cobal that Robinhood, who was previous the "bad guy" of the financial world, is now in and tricked it's users into buying a stock that would be worthless just so that Robinhood could shut of trading at the peak, and let their secret hedge-fund buddies make a ton of money. I'm not inclined to believe the conspiracy theory when there is a more more reasonable option.
- unethical_ban 6y ago
  The same firm, Citadel, that fills much of RH's orders is the firm that propped up Melvin Capital (the group that shorted GME and needed a bailout). Option 3: The cabal is there, it isn't secret, and they were on the hook to lose so much money that it was cheaper to essentially sacrifice the RH brand than to let the short get fucked to infinity. Edit: They have stated on a blog post that this was a risk management move on their part - not strictly in the interest of the customer. The market is broken.