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Market manipulation is still manipulation whether you've written it in your Terms of Service (which isn't the law btw like Craigslist do-not-scrape "law"). The

by f430 6y ago

Market manipulation is still manipulation whether you've written it in your Terms of Service (which isn't the law btw like Craigslist do-not-scrape "law"). The basic spirit of the contract between a trade executor and the client does not allow for interference barring regulatory or SEC enforcement. Meaning RH took it on themselves to enforce a rule that its users had no idea of, hence the outrage. If it was well known (with clear warnings on the splash screen of RH highlighting their "special" rule) then the case might be different. If it gets rejected at this level then almost certainly SEC will be involved. If they side with RH then it would certainly destroy the trust of the retail trading industry. We also now seem to be witnessing a political opportunity for the Biden administration (ex. AOC's tweet throwing support for WSB). Essentially what we are seeing is a payback by the people who got outsmarted by a bunch of redditors and arguing that they cannot be allowed to fail for their own stupid trades (like shorting over 100% of the stock available), so they pulled all the tricks in the book to once again bend the market to their will like they always have. Anybody who thinks things will go as they have before are mistaken; We are in a very different political environment and stuff like this is the perfect opportunity for the Biden administration.

enraged_camel 6y ago
>> Market manipulation is still manipulation whether you've written it in your Terms of Service (which isn't the law btw like Craigslist do-not-scrape "law"). Yes. And intentionally interfering with supply and demand is the textbook definition of market manipulation — it appears in SEC powerpoints and everything! https://www.sec.gov/files/Market%20Manipulations%20and%20Case%20Studies.pdf https://www.sec.gov/files/Market%20Manipulations%20and%20Cas...
beezle 6y ago
I'm sure this will all be downvoted because it will hurt peoples feelings. 1- RH, Etrade, etc are not manipulating anything. The ones who manipulated were the reddit and other chat rooms. If Costco doesn't want to stock your favorite item any more do you get to sue because you still want to buy it? 2- If the customers had no idea of the legal documents they signed when they opened their accounts, their bad, not the broker. 3- 'the trust of the retail trading industry' Certainly not retail investors (who are not the people doing this stuff). And I doubt also retail traders who are not engaged in mob trades based on what is coming out of internet chat rooms/boards. There was day trading prior to the advent of Robinhood and Covid-19, right? 4- First off, the shorts are done. That is a large part of why the price went to where it did. Second, the brokers are protecting themselves from default on margin loans as well as the headache and aggravation of closeouts when 'traders' moan about the fills. 5- Why on earth should the Biden administration go to bat for a retail trading mob? Many of whom are on record in the press as having used their stimulus and unemployment checks as capital? 6- Shorts are not only necessary for a market to function well, they are a common part of the market having nothing at all to do with a view on a company. The largest example of that are fund managers selling the stock of an aquiring company against a position they own in the company being purchased. Fund manager could mean pension fund manager, mutual fund manager, or, gasp, a hedge fund manager.
- Sohcahtoa82 6y ago
  > RH, Etrade, etc are not manipulating anything. I don't know how you could possibly argue that when RH is preventing the purchase of a stock, but not the selling (Which pushes the stock price down), and trying to use the argument of "we're trying to protect you from volatility!" > If Costco doesn't want to stock your favorite item any more do you get to sue because you still want to buy it? This is such an apples-to-oranges comparison here that I really don't feel you're arguing in good faith. > 2- If the customers had no idea of the legal documents they signed when they opened their accounts, their bad, not the broker. As others have said, EULA doesn't trump the law. > 3- Certainly not retail investors (who are not the people doing this stuff). Either I'm misunderstanding what you're saying here, or you are 100% incorrect. It is absolutely the retail investors that are buying the GME stock and doing this. > 4- First off, the shorts are done We don't know this yet. > Second, the brokers are protecting themselves from default on margin loans as well as the headache and aggravation of closeouts when 'traders' moan about the fills. Defaulting on margin loans is prevented by issuing a margin call. Some traders are moaning about their GME being liquidated because they bought on margin while going all-in on GME, but even on WSB, most traders understand that's how margin works. > 5- Why on earth should the Biden administration go to bat for a retail trading mob? For the same reason Ted Cruz is. RH is impeding the free market. It's pretty crazy right now. Ted Cruz, AOC, Ben Shapiro, and Donald Trump Jr are all upset with RH right now, though for different reasons. The leftists are upset that the hedge fund managers are pissed that the poors are beating them at their game, while the right is upset that RH is interfering with the free market. > 6- Shorts are not only necessary for a market to function well If it was merely a matter of investors being able to say "I think this company is going to fail, so I'm going to short it", then yes. But then that quickly creates extremely perverse incentives. Now, it becomes "I have invested my money into the failure of this company, so I'm going to short it even more and publish articles about how this company has no future." GameStop got a new CEO and had a path to recovery, and the hedge funds didn't like that since they were already shorting, so they doubled-down on the shorting. The funds are using their money to kill a company. While this is technically legal, I think it's incredibly immoral and unethical.
  - f430 6y ago

by f430 6y ago

enraged_camel 6y ago

>> Market manipulation is still manipulation whether you've written it in your Terms of Service (which isn't the law btw like Craigslist do-not-scrape "law"). Yes. And intentionally interfering with supply and demand is the textbook definition of market manipulation — it appears in SEC powerpoints and everything! https://www.sec.gov/files/Market%20Manipulations%20and%20Case%20Studies.pdf https://www.sec.gov/files/Market%20Manipulations%20and%20Cas...

beezle 6y ago

I'm sure this will all be downvoted because it will hurt peoples feelings. 1- RH, Etrade, etc are not manipulating anything. The ones who manipulated were the reddit and other chat rooms. If Costco doesn't want to stock your favorite item any more do you get to sue because you still want to buy it? 2- If the customers had no idea of the legal documents they signed when they opened their accounts, their bad, not the broker. 3- 'the trust of the retail trading industry' Certainly not retail investors (who are not the people doing this stuff). And I doubt also retail traders who are not engaged in mob trades based on what is coming out of internet chat rooms/boards. There was day trading prior to the advent of Robinhood and Covid-19, right? 4- First off, the shorts are done. That is a large part of why the price went to where it did. Second, the brokers are protecting themselves from default on margin loans as well as the headache and aggravation of closeouts when 'traders' moan about the fills. 5- Why on earth should the Biden administration go to bat for a retail trading mob? Many of whom are on record in the press as having used their stimulus and unemployment checks as capital? 6- Shorts are not only necessary for a market to function well, they are a common part of the market having nothing at all to do with a view on a company. The largest example of that are fund managers selling the stock of an aquiring company against a position they own in the company being purchased. Fund manager could mean pension fund manager, mutual fund manager, or, gasp, a hedge fund manager.

Sohcahtoa82 6y ago
> RH, Etrade, etc are not manipulating anything. I don't know how you could possibly argue that when RH is preventing the purchase of a stock, but not the selling (Which pushes the stock price down), and trying to use the argument of "we're trying to protect you from volatility!" > If Costco doesn't want to stock your favorite item any more do you get to sue because you still want to buy it? This is such an apples-to-oranges comparison here that I really don't feel you're arguing in good faith. > 2- If the customers had no idea of the legal documents they signed when they opened their accounts, their bad, not the broker. As others have said, EULA doesn't trump the law. > 3- Certainly not retail investors (who are not the people doing this stuff). Either I'm misunderstanding what you're saying here, or you are 100% incorrect. It is absolutely the retail investors that are buying the GME stock and doing this. > 4- First off, the shorts are done We don't know this yet. > Second, the brokers are protecting themselves from default on margin loans as well as the headache and aggravation of closeouts when 'traders' moan about the fills. Defaulting on margin loans is prevented by issuing a margin call. Some traders are moaning about their GME being liquidated because they bought on margin while going all-in on GME, but even on WSB, most traders understand that's how margin works. > 5- Why on earth should the Biden administration go to bat for a retail trading mob? For the same reason Ted Cruz is. RH is impeding the free market. It's pretty crazy right now. Ted Cruz, AOC, Ben Shapiro, and Donald Trump Jr are all upset with RH right now, though for different reasons. The leftists are upset that the hedge fund managers are pissed that the poors are beating them at their game, while the right is upset that RH is interfering with the free market. > 6- Shorts are not only necessary for a market to function well If it was merely a matter of investors being able to say "I think this company is going to fail, so I'm going to short it", then yes. But then that quickly creates extremely perverse incentives. Now, it becomes "I have invested my money into the failure of this company, so I'm going to short it even more and publish articles about how this company has no future." GameStop got a new CEO and had a path to recovery, and the hedge funds didn't like that since they were already shorting, so they doubled-down on the shorting. The funds are using their money to kill a company. While this is technically legal, I think it's incredibly immoral and unethical.
- f430 6y ago