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Does anyone know why Robinhood would block the symbols? If the SEC determines some manipulation happened, does Robinhood bear some liability? I'm not alleging

Does anyone know why Robinhood would block the symbols? If the SEC determines some manipulation happened, does Robinhood bear some liability? I'm not alleging a conspiracy or anything, it just seems odd to me that this kind of action comes preemptively from a broker. I would have expected the brokers to do nothing until the SEC indicates something one way or another, or for nothing to change if the SEC doesn't take a position either way. I feel like there's some part of this I'm missing.

marcinzm 6y ago
As I understand it, Robinhood has VC investors and uses third parties to execute trades (that pay Robinhood for it) which stand to lose on GME. The talk being that they pressured Robinhood into this action so they wouldn't lose as much money.
ngokevin 6y ago
Investors and key shareholders sacrificed Robinhood and are willing to eat lawsuits because hedge funds' GME positions tower over all of that.
mcv 6y ago
From what I understand, Citadel, the mother company of Melvin Capital, one of the largest short-sellers that got in trouble, is responsible for 60% of Robinhood's revenue, buying user data from them. Robinhood might be protecting their largest customer. Edit: it's possible Citadel pays Robinhood for something else instead. And it's possible they don't fully own but only invested in Melvin. Still, there do seem to be pretty clear ties.
alasdair_ 6y ago
Citadel is RobinHood’s biggest customer - they pay RH for order flow from “unsophisticated” investors. Citadel also owns a non-controlling interest in Melvin capital, a hedge fund that is/was massively short GME. Citadel gave them $2.7 billion earlier this week. It seems very likely that Citadel pressured RobinHood to stop all purchases so that Citadel’s investment is secure. There are additional rumors that Citadel went short GME right before the brokers stopped allowing people to buy, only allowing them to sell.

marcinzm 6y ago

As I understand it, Robinhood has VC investors and uses third parties to execute trades (that pay Robinhood for it) which stand to lose on GME. The talk being that they pressured Robinhood into this action so they wouldn't lose as much money.

ngokevin 6y ago

Investors and key shareholders sacrificed Robinhood and are willing to eat lawsuits because hedge funds' GME positions tower over all of that.

mcv 6y ago

From what I understand, Citadel, the mother company of Melvin Capital, one of the largest short-sellers that got in trouble, is responsible for 60% of Robinhood's revenue, buying user data from them. Robinhood might be protecting their largest customer. Edit: it's possible Citadel pays Robinhood for something else instead. And it's possible they don't fully own but only invested in Melvin. Still, there do seem to be pretty clear ties.

alasdair_ 6y ago

Citadel is RobinHood’s biggest customer - they pay RH for order flow from “unsophisticated” investors. Citadel also owns a non-controlling interest in Melvin capital, a hedge fund that is/was massively short GME. Citadel gave them $2.7 billion earlier this week. It seems very likely that Citadel pressured RobinHood to stop all purchases so that Citadel’s investment is secure. There are additional rumors that Citadel went short GME right before the brokers stopped allowing people to buy, only allowing them to sell.