4 ms·

Serious question: Since RobinHood is a private company, does the "if you don't like it, you can build your own platform" argument apply here? Or does that only

by jb775 6y ago

Serious question: Since RobinHood is a private company, does the "if you don't like it, you can build your own platform" argument apply here? Or does that only apply selectively when it benefits partisan politics? This is the natural evolution when censorship as we've recently seen is given a pass.

Layke1123 6y ago
I believe this is different because the SEC is involved, and if the SEC involved decides to rule that a broker cannot limit what stocks can be bought or sold because that would break the legal definition of what a brokerage is. Does anyone know the law well enough to know if this is indeed a violation of any statutes?
- dcolkitt 6y ago
  There’s no law whatsoever that says a brokerage has to trade all stocks.
  - derision 6y ago
    In fact there are a number of stocks that robinhood doesn't list, namely CEFs and others
    - Layke1123 6y ago
      Sure, not listing a stock is entirely different than only allowing a user to sell a listed stock.
  - mathnmusic 6y ago
    But there's a law against manipulating stocks.
  - zionic 6y ago
    That's just it though, Robin hood didn't delist gamestop. They just decided arbitrarily that their users are only allowed to sell it. Coincidentally, this is a move that highly benefits a major partner of theirs.
    - nv-vn 6y ago
      That connection is like 3 degrees of separation at best, though. Robinhood sells order flow to a number of market makers, one of which is Citadel Securities [1]. Citadel Securities is part of the Citadel group, which consists of a hedge fund (Citadel LLC) and a market making firm (Citadel Securities LLC) [2]. While both companies are owned by Ken Griffin and share many resources, they are split by a "Chinese Wall" [3] to prevent any conflict of interest between both sides of the firm. They also have different CEOs, management, employees, infrastructure, etc. as a result of this. Now, Citadel (the hedge fund) has invested $2 billion into Melvin Capital, which is one of the firms central to the whole issue [4]. Yet Melvin Capital has already closed its position in GME [5], which means that they no longer have a vested interest in the performance of GME. There are several glaring problems with the theory that Citadel is pushing for Robinhood to ban buying GME for financial motives: 1. Robinhood has NO relationship with Citadel LLC 2. Everybody knows about the theoretical conflict of interest between Citadel/Citadel Securities so it is incredibly unlikely that Citadel Securities would risk doing anything to help Citadel in such a high profile scenario (i.e. the SEC/FINRA would be able to find out this kind of thing very quickly and very easily) 3. Citadel has no financial motive to stop trading of GME, because Melvin Capital has no financial motive to stop trading of GME 4. If it was as simple as trying to profit off of GME going down, why would they bother halting trades on other securities (AMC, BB, NOK, BBBY, etc.)? This article does a really good job at explaining the situation (much better than I can do) [6] [1] https://cdn.robinhood.com/assets/robinhood/legal/RHF%20SEC%20Rule%20606%20and%20607%20Disclosure.pdf https://cdn.robinhood.com/assets/robinhood/legal/RHF%20SEC%2... [2] https://www.chicagobusiness.com/article/20170203/NEWS01/170209978/chicago-billionaire-ken-griffin-splits-citadel-into-two-companies https://www.chicagobusiness.com/article/20170203/NEWS01/1702... [3] https://www.investopedia.com/terms/c/chinesewall.asp https://www.investopedia.com/terms/c/chinesewall.asp [4] https://www.wsj.com/articles/citadel-point72-to-invest-2-75-billion-into-melvin-capital-management-11611604340 https://www.wsj.com/articles/citadel-point72-to-invest-2-75-... [5] https://www.reuters.com/article/us-gamestop-melvin-idUSKBN29X0EN https://www.reuters.com/article/us-gamestop-melvin-idUSKBN29... [6] https://finance.yahoo.com/video/heres-why-robinhood-restricting-users-173049721.html https://finance.yahoo.com/video/heres-why-robinhood-restrict...
      - 6y ago
Sohcahtoa82 6y ago
There are dozens of trading platforms, and RH isn't the only major one that offers free trades. I expect that a lot of RH users are going to do some research and discover that there are alternatives that are just as good, or even better.
StriverGuy 6y ago
This is a bit of a dense question - but being shut out of trading a stock doesn't physically threaten someones life. So not exactly analogous to the twitter situation you are clearly alluding to.
marcinzm 6y ago
Robinhood can do whatever it wants and people can in response give it a 1 star rating. They can also complain about it not being a good platform to use. Freedom goes both ways. You can also complain about Twitter or give its app a low rating or just stop using it.
- randompwd 6y ago
  > Robinhood can do whatever it wants Is that in it's terms of service?
- postsantum 6y ago
  Technically, anyone can do whatever they want but go to jail later
renewiltord 6y ago
Obviously the argument applies. Retail are aiming to punish them by no longer using them. It's freedom.
javier123454321 6y ago
I mean, doing something that will have a significant effect on markets is manipulation, which is regulated by the sec. It does apply, but it won't change. The only way to prevent this is removing the intermediaries, which events like this are pushing people towards.
unethical_ban 6y ago
Holy shit, I can't believe people are comparing RH to Twitter, retail investment and corrupt hedge funds to people inciting violence against election results. FWIW, this is an app in a supposedly regulated sector, making the call to affect stock prices and cut retail investors out of the market and causing a stock to tank.
- jb775 6y ago
  I'm not comparing RH to Twitter, I'm comparing a private business' decision to a private business' decision, per your logic on the Twitter situation (banning any loud right-wing person). Time will tell if RH actually did anything illegal. If they didn't, then your previous Twitter logic should hold....i.e. "they're a private business and they can do whatever they want"....right? I think what's ACTUALLY going on (whether your cognitive dissonance will allow you to perceive this comment or not), is that since this doesn't cut across political lines, you want to treat the situation differently.
  - unethical_ban 6y ago
    Your comment doesn't get as much respect from me, because you think every loud right wing person is being censored on twitter, which is objectively, verifiably, bullshit. You are wrong. Incorrect. Lying? I don't know if you believe what you say or not. Calls to violence from people in power are different from market manipulation.
proto-n 6y ago
No it doesn't apply. If you are dining in a restaurant and it starts putting cocaine into your coffee, that's still very illegal, regardless of whether you can choose another restaurant. One sided halting in a moment like this reeks of market manipulation, which is illegal.

by jb775 6y ago

Layke1123 6y ago

I believe this is different because the SEC is involved, and if the SEC involved decides to rule that a broker cannot limit what stocks can be bought or sold because that would break the legal definition of what a brokerage is. Does anyone know the law well enough to know if this is indeed a violation of any statutes?

dcolkitt 6y ago
There’s no law whatsoever that says a brokerage has to trade all stocks.
- derision 6y ago
  In fact there are a number of stocks that robinhood doesn't list, namely CEFs and others
  - Layke1123 6y ago
    Sure, not listing a stock is entirely different than only allowing a user to sell a listed stock.
- mathnmusic 6y ago
  But there's a law against manipulating stocks.
- zionic 6y ago
  That's just it though, Robin hood didn't delist gamestop. They just decided arbitrarily that their users are only allowed to sell it. Coincidentally, this is a move that highly benefits a major partner of theirs.
  - nv-vn 6y ago
    That connection is like 3 degrees of separation at best, though. Robinhood sells order flow to a number of market makers, one of which is Citadel Securities [1]. Citadel Securities is part of the Citadel group, which consists of a hedge fund (Citadel LLC) and a market making firm (Citadel Securities LLC) [2]. While both companies are owned by Ken Griffin and share many resources, they are split by a "Chinese Wall" [3] to prevent any conflict of interest between both sides of the firm. They also have different CEOs, management, employees, infrastructure, etc. as a result of this. Now, Citadel (the hedge fund) has invested $2 billion into Melvin Capital, which is one of the firms central to the whole issue [4]. Yet Melvin Capital has already closed its position in GME [5], which means that they no longer have a vested interest in the performance of GME. There are several glaring problems with the theory that Citadel is pushing for Robinhood to ban buying GME for financial motives: 1. Robinhood has NO relationship with Citadel LLC 2. Everybody knows about the theoretical conflict of interest between Citadel/Citadel Securities so it is incredibly unlikely that Citadel Securities would risk doing anything to help Citadel in such a high profile scenario (i.e. the SEC/FINRA would be able to find out this kind of thing very quickly and very easily) 3. Citadel has no financial motive to stop trading of GME, because Melvin Capital has no financial motive to stop trading of GME 4. If it was as simple as trying to profit off of GME going down, why would they bother halting trades on other securities (AMC, BB, NOK, BBBY, etc.)? This article does a really good job at explaining the situation (much better than I can do) [6] [1] https://cdn.robinhood.com/assets/robinhood/legal/RHF%20SEC%20Rule%20606%20and%20607%20Disclosure.pdf https://cdn.robinhood.com/assets/robinhood/legal/RHF%20SEC%2... [2] https://www.chicagobusiness.com/article/20170203/NEWS01/170209978/chicago-billionaire-ken-griffin-splits-citadel-into-two-companies https://www.chicagobusiness.com/article/20170203/NEWS01/1702... [3] https://www.investopedia.com/terms/c/chinesewall.asp https://www.investopedia.com/terms/c/chinesewall.asp [4] https://www.wsj.com/articles/citadel-point72-to-invest-2-75-billion-into-melvin-capital-management-11611604340 https://www.wsj.com/articles/citadel-point72-to-invest-2-75-... [5] https://www.reuters.com/article/us-gamestop-melvin-idUSKBN29X0EN https://www.reuters.com/article/us-gamestop-melvin-idUSKBN29... [6] https://finance.yahoo.com/video/heres-why-robinhood-restricting-users-173049721.html https://finance.yahoo.com/video/heres-why-robinhood-restrict...
    - 6y ago

Sohcahtoa82 6y ago

There are dozens of trading platforms, and RH isn't the only major one that offers free trades. I expect that a lot of RH users are going to do some research and discover that there are alternatives that are just as good, or even better.

StriverGuy 6y ago

This is a bit of a dense question - but being shut out of trading a stock doesn't physically threaten someones life. So not exactly analogous to the twitter situation you are clearly alluding to.

marcinzm 6y ago

Robinhood can do whatever it wants and people can in response give it a 1 star rating. They can also complain about it not being a good platform to use. Freedom goes both ways. You can also complain about Twitter or give its app a low rating or just stop using it.

randompwd 6y ago
> Robinhood can do whatever it wants Is that in it's terms of service?
postsantum 6y ago
Technically, anyone can do whatever they want but go to jail later

renewiltord 6y ago

Obviously the argument applies. Retail are aiming to punish them by no longer using them. It's freedom.

javier123454321 6y ago

I mean, doing something that will have a significant effect on markets is manipulation, which is regulated by the sec. It does apply, but it won't change. The only way to prevent this is removing the intermediaries, which events like this are pushing people towards.

unethical_ban 6y ago

Holy shit, I can't believe people are comparing RH to Twitter, retail investment and corrupt hedge funds to people inciting violence against election results. FWIW, this is an app in a supposedly regulated sector, making the call to affect stock prices and cut retail investors out of the market and causing a stock to tank.

jb775 6y ago
I'm not comparing RH to Twitter, I'm comparing a private business' decision to a private business' decision, per your logic on the Twitter situation (banning any loud right-wing person). Time will tell if RH actually did anything illegal. If they didn't, then your previous Twitter logic should hold....i.e. "they're a private business and they can do whatever they want"....right? I think what's ACTUALLY going on (whether your cognitive dissonance will allow you to perceive this comment or not), is that since this doesn't cut across political lines, you want to treat the situation differently.
- unethical_ban 6y ago
  Your comment doesn't get as much respect from me, because you think every loud right wing person is being censored on twitter, which is objectively, verifiably, bullshit. You are wrong. Incorrect. Lying? I don't know if you believe what you say or not. Calls to violence from people in power are different from market manipulation.

proto-n 6y ago

No it doesn't apply. If you are dining in a restaurant and it starts putting cocaine into your coffee, that's still very illegal, regardless of whether you can choose another restaurant. One sided halting in a moment like this reeks of market manipulation, which is illegal.