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Imagine signing up for a broker and then being told you can't buy TSLA or DIS because its been doing too well - are they even a broker at all?

slg 6y ago
Does a broker have a legal obligation to allow you to purchase any stock? I am genuinely asking as IANAL. I can't go into an Apple Store and demand they sell me a Google Pixel. It seems like these places should have every right to choose what services they offer or products they sell. I wouldn't do business with Robinhood for a number of reasons that go back before this recent spat of issues, I am just not sure preventing purchasing GME is the worst aspect of this.
- PKop 6y ago
  Are they entitled to prevent people from buying the shares you hold? If people can't buy them, this obviously causes the price to fall. They are making the price of what you hold fall...they deserve to be sued good and hard for this.
  - slg 6y ago
    >Are they entitled to prevent people from buying the shares you hold? So if I am long on a stock that gets delisted from an exchange, can I sue that exchange because they are making it more difficult for people to buy that stock?
    - mlthoughts2018 6y ago
      How is this related at all to the broker question? Exchanges and brokers are completely different concepts.
      - slg 6y ago
        Because the logic that comment used for a lawsuit was as follows: >They are making the price of what you hold fall...they deserve to be sued good and hard for this. That logic applies to a number of entities and not just brokers. If I can sue a broker for this reason, can I sue anyone for that reason?
        mlthoughts2018 6y ago
        That’s not how laws work. Just because you personally see a way it can be philosophically generalized or conceptually generalized does not mean laws apply the same to all generalizations. Brokers, exchanges, investment firms, banks, etc., all have specific legal obligations based on different types of fiduciary duty, different service offerings, etc. It can easily be the case that an exchange entity has a legal ability to deny access through delisting while a broker entity does not have the right to deny service in some particular scenario. I am not saying what the case is for brokers today, but regardless, appealing to some notion of proof by contradiction because of generalizing a behavior is not a valid way to analyze the situation.
        slg 6y ago
        >It can easily be the case that an exchange entity has a legal ability to deny access through delisting while a broker entity does not have the right to deny service in some particular scenario. I realize that. That previously quoted answer was in response to me asking "Does a broker have a legal obligation to allow you to purchase any stock?" Someone answered that with a broad response without referring to any laws. I'm not sure how that leaves me with a responsibility to do a full legal breakdown of the issue.
        PKop 6y ago
        If your over-arching point is the legal system won't side with the RH users, I'm fine with that premise because I think "laws" are a meme, and the same powerful institutions screwing over the traders who went against them are the same ones who not only influence how laws are written but also enforced. I thought you were saying in principle their was no basis for users to feel wronged by RH. But this is silly, because you and I both know without a shadow of a doubt that RH shut down buys to protect the underwater hedge funds. It's obvious to anyone with a brain. And I'm confident it's obvious to you. And would be obvious to any judge, jury or lawyer. But does it matter that its true? No. Is there some legal basis that would encompass "you can't shut down trading to protect some hedge fund that you are connected with". I'm certain there is, but it probably won't matter. Because "the law" and "rule of law" is a meme. Power is what matters. And the sovereign power decides what the law is... average joe traders don't have the power and hedge funds and finance in this case do.
- betterunix2 6y ago
  "Does a broker have a legal obligation to allow you to purchase any stock?" No, I have seen all sorts of seemingly arbitrary restrictions since I started investing (back in college), on everything from mutual funds to ETPs to penny stocks.
- banachtarski 6y ago
  Framed another way, can a broker prevent the purchase or sale of stock to bias the asset's movement in a particular direction to benefit themselves or a friendly third party? Of course not. This is any number of SEC violations
- llampx 6y ago
  What kind of strawman is that? They let you buy GME until yesterday. Stop being intellectually dishonest.

slg 6y ago

Does a broker have a legal obligation to allow you to purchase any stock? I am genuinely asking as IANAL. I can't go into an Apple Store and demand they sell me a Google Pixel. It seems like these places should have every right to choose what services they offer or products they sell. I wouldn't do business with Robinhood for a number of reasons that go back before this recent spat of issues, I am just not sure preventing purchasing GME is the worst aspect of this.

PKop 6y ago
Are they entitled to prevent people from buying the shares you hold? If people can't buy them, this obviously causes the price to fall. They are making the price of what you hold fall...they deserve to be sued good and hard for this.
- slg 6y ago
  >Are they entitled to prevent people from buying the shares you hold? So if I am long on a stock that gets delisted from an exchange, can I sue that exchange because they are making it more difficult for people to buy that stock?
  - mlthoughts2018 6y ago
    How is this related at all to the broker question? Exchanges and brokers are completely different concepts.
    - slg 6y ago
      Because the logic that comment used for a lawsuit was as follows: >They are making the price of what you hold fall...they deserve to be sued good and hard for this. That logic applies to a number of entities and not just brokers. If I can sue a broker for this reason, can I sue anyone for that reason?
      - mlthoughts2018 6y ago
        That’s not how laws work. Just because you personally see a way it can be philosophically generalized or conceptually generalized does not mean laws apply the same to all generalizations. Brokers, exchanges, investment firms, banks, etc., all have specific legal obligations based on different types of fiduciary duty, different service offerings, etc. It can easily be the case that an exchange entity has a legal ability to deny access through delisting while a broker entity does not have the right to deny service in some particular scenario. I am not saying what the case is for brokers today, but regardless, appealing to some notion of proof by contradiction because of generalizing a behavior is not a valid way to analyze the situation.
        slg 6y ago
        >It can easily be the case that an exchange entity has a legal ability to deny access through delisting while a broker entity does not have the right to deny service in some particular scenario. I realize that. That previously quoted answer was in response to me asking "Does a broker have a legal obligation to allow you to purchase any stock?" Someone answered that with a broad response without referring to any laws. I'm not sure how that leaves me with a responsibility to do a full legal breakdown of the issue.
        PKop 6y ago
        If your over-arching point is the legal system won't side with the RH users, I'm fine with that premise because I think "laws" are a meme, and the same powerful institutions screwing over the traders who went against them are the same ones who not only influence how laws are written but also enforced. I thought you were saying in principle their was no basis for users to feel wronged by RH. But this is silly, because you and I both know without a shadow of a doubt that RH shut down buys to protect the underwater hedge funds. It's obvious to anyone with a brain. And I'm confident it's obvious to you. And would be obvious to any judge, jury or lawyer. But does it matter that its true? No. Is there some legal basis that would encompass "you can't shut down trading to protect some hedge fund that you are connected with". I'm certain there is, but it probably won't matter. Because "the law" and "rule of law" is a meme. Power is what matters. And the sovereign power decides what the law is... average joe traders don't have the power and hedge funds and finance in this case do.
betterunix2 6y ago
"Does a broker have a legal obligation to allow you to purchase any stock?" No, I have seen all sorts of seemingly arbitrary restrictions since I started investing (back in college), on everything from mutual funds to ETPs to penny stocks.
banachtarski 6y ago
Framed another way, can a broker prevent the purchase or sale of stock to bias the asset's movement in a particular direction to benefit themselves or a friendly third party? Of course not. This is any number of SEC violations
llampx 6y ago
What kind of strawman is that? They let you buy GME until yesterday. Stop being intellectually dishonest.