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But trading wasn't stopped. Avenues for non-professional investors to continue buying shares were cut off. They were still allowed to sell shares as desired.

But trading wasn't stopped. Avenues for non-professional investors to continue buying shares were cut off. They were still allowed to sell shares as desired. I don't really have an opinion on whether the GME thing is a pump and dump scam, or a real opportunity to enforce a classic "The market can remain irrational longer than you can remain solvent" lesson to those shorting these stocks. But I do have a real issue with removing just the "buy" side of the equation. Price is always a function of supply and demand, and I don't understand how anyone could justify halting just buy orders. The obvious impact of artificially reduced demand is that the price will drop. Further - if this price drop was designed to protect these firms from possible losses (and I don't really care whether that loss was by allowing unvetted shorts by investors who don't have the capital to cover, or whether it was collusion to protect other parties) then I still don't see how you can reasonably come to a conclusion that looks good for these firms here - They're manipulating stock prices to avoid losses.

silexia 6y ago
Short squeezes are illegal according to the SEC. WSB shows many people clearly collaborating to create a short squeeze, example - https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_short_interest_remains_at_139_bloomberg_the/ https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_.... Robinhood would have legal liability for aiding and abetting an illegal short squeeze had they continued.
- horsawlarway 6y ago
  Short squeezes are absolutely not illegal - They're a natural property of how the investment vehicle operates when the price of shares spikes. The illegal part is a scheme to collude and manipulate the availability or price of the stock to intentionally cause a short squeeze. I'm not entirely sure I agree with you that posts like that are "collusion" (Cornell def here is interesting as a refresher - https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusion), but I can certainly concede there's plenty of shades of gray here.

silexia 6y ago

Short squeezes are illegal according to the SEC. WSB shows many people clearly collaborating to create a short squeeze, example - https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_short_interest_remains_at_139_bloomberg_the/ https://www.reddit.com/r/wallstreetbets/comments/l594yg/gme_.... Robinhood would have legal liability for aiding and abetting an illegal short squeeze had they continued.

horsawlarway 6y ago
Short squeezes are absolutely not illegal - They're a natural property of how the investment vehicle operates when the price of shares spikes. The illegal part is a scheme to collude and manipulate the availability or price of the stock to intentionally cause a short squeeze. I'm not entirely sure I agree with you that posts like that are "collusion" (Cornell def here is interesting as a refresher - https://www.law.cornell.edu/wex/collusion https://www.law.cornell.edu/wex/collusion), but I can certainly concede there's plenty of shades of gray here.