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This lawsuit will go nowhere. At best a tiny settlement after years of litigation. Congress will have a few hearings for show, so reps can get face time and cla

This lawsuit will go nowhere. At best a tiny settlement after years of litigation. Congress will have a few hearings for show, so reps can get face time and claim to be "for the people". SEC will wag their finger, might even levy a few hundred thousand in fines. Citadel and gang operate this casino. If they think they're losing, they change the rules so they aren't. What it tells me is that they're getting increasingly desperate if they're willing to brazenly manipulate the market like this. Seems like they didn't close out their short position, like they claimed they had 2 days ago. It'd be interesting to see if the casino wins this game.

nine_zeros 6y ago
> This lawsuit will go nowhere. At best a tiny settlement after years of litigation. Congress will have a few hearings for show, so reps can get face time and claim to be "for the people". SEC will wag their finger, might even levy a few hundred thousand in fines. This will be the end of wall street. Or at least, the end of companies like Robinhood. Faith in American systems were already at all time low after last four years and now with this kind of market manipulation at the expense of retail investors, American stock market will be bust. There is zero reason to play in this casino.
- dheera 6y ago
  Unfortunately the odds of winning in the stock market even buying random stocks are still way better than a real casino, and casinos are still around.
  - Andrew_nenakhov 6y ago
    Casinos are OK. Gambling is a special tax applied to people with bad understanding of the probability theory.
    - thatguy0900 6y ago
      I feel like the people who say this have never been to a casino, they're pretty fun. I would wager most people going know they will lose money. Gambling addiction is a real problem, though.
      - rootusrootus 6y ago
        I've only been once. Even knowing I would lose money, I still found the loss/fun ratio really awful, and when I walked out of there I knew I'd never go back. For that kind of money I can buy toys I actually get to keep, or buy an experience worth remembering. Gambling socially, I enjoy. Playing poker with the guys, typically. But the stakes are absolutely tiny, so we really are just playing for fun.
      - Andrew_nenakhov 6y ago
        I knew some gaming addicts. Each and everyone of them was living with feverish hope to win big one day. However, I believe that everyone has a sacred right to destroy themselves in any way they like. If they choose to ignore conscience and indulge in gambling, it is on them.
    - pc86 6y ago
      Preface: I'm totally in favor of people going to casinos if they want to. People say this and chuckle about how witty they are but it's the only "tax" that we let billionaires extract from the poor and act like we're okay with it.
  - deleted 6y ago
    [deleted]
  - throwaway2245 6y ago
    If you got a bunch of spare money and spare time, enjoy the casino. If you got a bunch of spare money, enjoy the stock market.
- linuxftw 6y ago
  Wallstreet feeds off of 401ks and municipal pension accounts. Retail investors can't influence the market broadly. Americans aren't going to stop putting money into 401ks and 401k administrators aren't going to stop shoveling money into their friend's 'funds.'
- hi5eyes 6y ago
  or the media steps in and runs damage control all they have to do is lie for a few months and people will completely forget hell, even if they have to lie for a few years, they already did that with ebil organge man and it only made the public trust them even more pension funds arent going to stop putting money into private equity, today will just make people less inclined to go retail I could see a lot of money leaving wall street for emerging markets over the next 10 years but I dont think a full divestment from american markets will happen in my lifetime
- xwdv 6y ago
  Where else are you supposed to put your money? Bonds? Real estate? A bank savings account? Good luck. People will not be able to live with their own failures. And where will that bring them? Back to stocks.
  - drcross 6y ago
    Crypto enters the chat
    - nine_zeros 6y ago
      This. Alternatives exist and will be created as faith in America keeps falling. The world hasn't run out of smart people.
    - robntheh00d 6y ago
      Hedge funds already game crypto. At the root it’s nation state currency being manipulated. Like in 2008. Privatize the gains and socialize the losses. The entire ledger needs a wipe. It’s pure emotional bias to suggest the future is obliged to carry the debt of the past. There’s nothing in science suggesting such a truth exists.
- ThisIsTheWay 6y ago
  Robinhood could shut their doors tonight and it would have little impact on Wall St. or the American stock market. Robinhood isn't even in the top 5 for online brokers in terms of assets under management (AUM). Vanguard, Schwab, BAML, Fidelity, and Ameritrade are literally handling trillions of dollars (that's trillions with a T) [0], while Robinhood is estimated to be managing ~$20 Billion. [1] Sure, you could argue that's not all "retail investment", but they are not even in the same ballpark. [0]: https://www.fool.com/the-ascent/research/online-brokerage-statistics/ https://www.fool.com/the-ascent/research/online-brokerage-st... [1]: https://www.brokerage-review.com/investing-firm/assets-under-management/robinhood-aum.aspx https://www.brokerage-review.com/investing-firm/assets-under... EDIT: Added concession in last line that not all in the top 5's AUM is retail, but the point still stands.
  - Clubber 6y ago
    It's not about RH at this point, it's about faith in the market. It's like you were winning at the casino and a cop came in, put you in handcuffs, then gave all your chips back to the dealer.
    - homeless_engi 6y ago
      If you count cards, the pit boss will ask you to leave. Personally, not a fan of the casino metaphor.
      - ThisIsTheWay 6y ago
        +1, fully agreed. There are definitely people making stupid bets and losing (like they should, IMO), but the notion that markets are this black box beyond human comprehension is laughable. That's especially true when you filter out the noise and find companies with solid fundamentals.
    - ThisIsTheWay 6y ago
      Again, I think you're overestimating the negative sentiment about the market being driven by the madness that is GME, BB, KOSS, and EXP over the last few weeks. Most retail investors are watching from the sidelines and scarfing down popcorn, not actively participating. You're hearing about a very small portion of the market and extrapolating that out to everyone, but that's simply not the case. Market manipulation is not new, and it's not impacting most retail investment strategies, which are much longer term. This is exposing inequities in the market that have existed for a long time, but I would be shocked if it has a significant impact on the assets of retail investors. As others have said, what other options are there? The game is imperfect, but that doesn't mean everyone stops playing all the sudden.
- deleted 6y ago
  [deleted]
trhway 6y ago
>SEC will wag their finger I think SEC greenlighted what in my view amounts to a highly illegal action by Citadel/Robinhood (as i think Citadel still has exposure, probably indirectly, on the short side). The situation in its nature does look like the CDS calls which caused the 2008 crisis. I think some "too big to fail" players wrote a humongous amount of GME/etc. uncovered calls (and similarly structured contracts) in the previous months which now threaten to take them down. I mean writing the $100-200 GME calls were practically free money back then while these days it has materialized as the tens of $B liability. Similar to CDS - the statistics practiced on Wall Street permits to have tremendously huge potential liability if it is at a very low probability. When such a low probability event happens though ... hopefully you're too big to fail and the system would then step in to save you by socializing your losses in some way. So, before going outright bailout road which would be tough politically, i think big people decided to try to spread/socialize that "too big to fail" players' loss among the retail investors, and thus the stock buying block for retail investors (i'm voting with my dollar - have a bit of long of AMC).
CamelCaseName 6y ago
With Gary Ginsler at the SEC, who knows?
- silexia 6y ago
  Please keep in mind that by continuing to allow trades, Robinhood was taking on major legal risks. People have been attempting a short squeeze all week. Short squeezes are illegal. By allowing a short squeeze to continue with no action, Robinhood would have been taking on massive legal liability for aiding and abetting illegal activity.
  - u10 6y ago
    They absolutely are not illegal. Shorts got greedy and got caught out. Should short sellers not have any downside to their trades?
    - silexia 6y ago
      https://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm. Control plus F "short squeeze". Intentional short squeezes like what is happening in GME is illegal.
      - Tokelin 6y ago
        Intentional would be the key word. Would it be easy to prove it was intentional?
        simias 6y ago
        I don't know enough about this subject to form an opinion on the legality and morality of what's hapenning right now but if the only rub is whether the squeeze is intentional or not I recommend that you have a peek at the wallstreetbets subreddit right now. It's very much intentional and out in the open.
      - stransky 6y ago
hoka-one-one 6y ago
I don't understand how you could possibly be angry when you didn't even take the time to read the ToS.
- gspr 6y ago
  Do you read the ToS for every service that you use?
  - matkoniecz 6y ago
    And reread it every time it was changed?
    - hoka-one-one 6y ago
      They notify you when it changes, so yes.
  - freeflight 6y ago
    Equating speculative stock trading with opening a Facebook account is a very weird thing to do.
  - deleted 6y ago
    [deleted]
  - hoka-one-one 6y ago
    Yes.
- FabHK 6y ago
  You're right, but I'd not make that argument here. I made a similar argument when this recalcitrant doctor was pulled of a United plane a few years back, justified in my view, and in line with the conditions of carriage. But, yeah, HN crowd wasn't pleased. (Many said they'd never fly United again, and most people wouldn't... United share price dropped a bit, then went straight back up to where it was and beyond. Well, until COVID-19.) Edit to add: BTW, the point is not that you should always read the TOS. The point is that you should read the TOS before complaining if something unexpected happens.
FabHK 6y ago
> they're willing to brazenly manipulate the market like this Evidence? The interview below (with CEO of broker Webull) claims that the clearing firms cannot (or don't want to) cover the increased cost when clearing these trades, and told many brokers that they won't open positions anymore, due to the two day settlement delay. In other words, an entirely innocuous explanation.
- whoisninja 6y ago
  if hedge funds were long, it would have happened? it is short-sellers who need to pay up the margin calls etc. the way short selling works, it can create crazy leverage it is definitely a lie
  - JumpCrisscross 6y ago
    > if hedge funds were long, it would have happened? Yes. DTCC changes collateral requirements on securities all the time [1]. The collateral requirements they put on GME aren't even that egregious. Robinhood just didn't want to pay up. [1] Literally, every day. But the haircuts they apply to the last day's market prices are also quite variable.
    - FabHK 6y ago
      Mate, you can't just walk in here with detailed knowledge and settlement mechanics and all. It's a revolution against the conspiracy! </s>
    - zaroth 6y ago
      What does DTCC collateral requirements have to do with retail investors trying to buy shares in a cash account? Stopping margin trading, absolutely. Stopping short selling, of course. But we’re not talking about either of those things. We’re talking about cash-funded limit Buy orders on a duly listed publicly traded stock.
      - JumpCrisscross 6y ago
SilasX 6y ago
>Citadel and gang operate this casino. If they think they're losing, they change the rules so they aren't. Wait, is Citadel a big enough player as to influence the regulatory system, like on the level of JP Morgan or Goldman Sachs?
- JumpCrisscross 6y ago
  > is Citadel a big enough player as to influence the regulatory system, like on the level of JP Morgan or Goldman Sachs No. They barely avoided going out of business the last time around.
  - cde-v 6y ago
    Sounds exactly like JP Morgan and Goldman Sachs.
    - JumpCrisscross 6y ago
      > Sounds exactly like JP Morgan and Goldman Sachs I don't think JPMorgan needed any government intervention. Goldman didn't directly, but if AIG had gone under so would they. (To be fair, so would the entire financial system.) But in the end, both of them got help. Citadel didn't. It wasn't in that club. It is not now. If Citadel failed tomorrow, it would make headlines for a week, and then we'd move on.
      - thedudeabides5 6y ago
        That's what you might think, but since the Volcker rule, a lot of the kind of 'liquidity provision' (aka trading) done in the banks has now been forced into funds like Citadel. Meaning 'too big to fail' applies to hedge funds now just like investment banks. Ala LTCM https://en.wikipedia.org/wiki/When_Genius_Failed https://en.wikipedia.org/wiki/When_Genius_Failed
        JumpCrisscross 6y ago
        > Meaning 'too big to fail' applies to hedge funds now just like investment banks LTCM wasn't making markets and it was done in by leveraged bets on Russian bonds. The term you are looking for is systemically important financial institution (SIFI) [1]. BlackRock, with $9 trillion under management, is a SIFI. Citadel, with under $40 billion, is not. [1] https://en.wikipedia.org/wiki/Systemically_important_financial_institution https://en.wikipedia.org/wiki/Systemically_important_financi...
this_user 6y ago
What are they even alleging RH did wrong? Any broker is free to decide what the let their customers trade. They could restrict buying AAPL if they wanted to. This is like trying to sue a bar for having stopped serving your favourite beer. There is absolutely no case here.
- avereveard 6y ago
  found the "should just build their own exchange with their rules!" comment
- JumpCrisscross 6y ago
  > There is absolutely no case here. There isn't, but I think one can make the case that there should be. At the very least, communication from Robinhood, from the exchanges and from regulators was piss poor. As a result, we have half the internet wrapped up in some Ken Griffin as Gordon Gecko Batman conspiracy theory. Robinhood was criticized for marketing day trading to people who, to a large degree, didn't know better. The counterargument was people knew what they were getting into and were free to do it. Fair enough. This adds a new wrinkle. It wasn't ever a day trading platform! A day trading platform should be able to handle high volumes. It should be able to handle increased collateral requirements. It should be able to handle some market makers going offline. What Robinhood did is contractually allowed. But it flies in the face of what they held themselves out to be. Robinhood sold a turd doughnut, folks said "it's fine, I want a turd doughnut," and then the turd turned out to be uranium.
  - this_user 6y ago
    Anyone who has a bit of experience trading the markets saw this (or something like this) coming for days. Just because these people don't know the first thing about market regulation doesn't mean they have a case. What they did was effectively form a public stock pool for the purpose of disrupting the orderly function of the market, and drive up the price beyond all reason. This kind of thing used to happen regularly a century ago until regulation was enacted in order to stem that kind of abuse. If the SEC weren't in what appears to be a coma, they should have enforced those rules days ago by completely halting trading in the stock. But it seems that falls on private companies now for some reason.
boh 6y ago
Various trading halts occur fairly regularly. If it's possible to win a suit against an exchange halting trades, institutional investors would be suing exchanges on a regular basis. Also the creation of the SEC was essentially to protect retail investors from speculative investments (that typically cleaned them out). It would be less likely to see a trade halt as going "against the people" but as a consumer protection practice, so it's doubtful it will be wagging too many fingers at RH.
- zionic 6y ago
  "halting trades" is not the same as "halting buys only while allowing people to sell in an attempt to crash the price so our biggest customer doesn't lose money"
  - boh 6y ago
    It is. Halting trades always produces winners/losers. Retail investors are RH's biggest customers. They're diminishing their risk of suits they'd likely lose/regulatory scrutiny by halting buys. The SEC will more likely hit you for allowing pumps rather than preventing them.
    - Tokelin 6y ago
      How is halting trades the same as only halting buys? By halting trades it is implied selling is also halted.
    - shawabawa3 6y ago
      It's absolutely not the same Trading halts are at the exchange level and stop _all_ buys and sells What happened here is some brokers/clearing houses prevented _retail traders_ from buying, but not from selling
      - boh 6y ago
        Exchanges are able to decide what to halt (obviously since that's what they did). The SEC/class action suits are free to argue the issue, but the likelihood the suit will succeed is low and SEC intervention (beyond an opinion statement) is also low. In the investment space, retail investors are generally treated like children who need to be protected (that's what the SEC is mostly tasked with). RH will make the argument that it was protecting the children from hurting themselves and the SEC will likely go along with it (that's their assumption anyway). Fairness isn't something you generally see in trading.
goatinaboat 6y ago
Citadel and gang operate this casino. If they think they're losing, they change the rules so they aren't. Best investment money can buy is after-dinner speakers fees to people who then show up at the regulators.
wbsun 6y ago
If that's the case, then the cost of violating rules for them is trivial enough that they can simply just keep doing this: 1) pump a stock price by allowing buy but restricting sell, 2) then they short this stock to 100%+, 3) they allow sell but restricting buy to collapse the price. Is the society already working this way?
- hirundo 6y ago
  I expect a larger cost from violating the trust of their customers. They'll lose many and if they do grow, grow more slowly. It's an advantage to their competitors.
  - neltnerb 6y ago
    What is actually interesting to me is that it would be shocking of Robinhood didn't anticipate getting sued over this. It smells and looks like halting trading because their owners didn't like the result. Maybe the lawsuit will fail, but they will obviously take a giant reputational hit and it is fascinating to me that they chose to do that. What is the upside? The only thing that makes sense to me is that the owners of Robinhood have too much conflict of interest with the hedge funds that were losing money (and so are acting against the best interests of Robinhood itself in favor of their funders). Alternatively, maybe they're being honest about it and what's going on at this point has nothing to do with hedge funds and everything to do with what appears to be a scheme to pump up the price and the people that are controlling the narrative sell first. It's unclear what hedge fund is getting it stuck to them at this point, didn't they say they covered their position already? If that is true, then it really does start to look like what started as an interesting way to penalize hedge funds doing this has turned into a bitcoin-style bubble. Which can also be a useful point to make, but a point that is completely disconnected from the desire to screw over hedge funds.
    - gerash 6y ago
      Cryptocurrencies are also extremely volatile but I don't see them disabling the "buy" button when the prices shoot up. I personally am going to switch away from them to some other brokerage. Their app is very well made though so I hope the competition catches up
dalbasal 6y ago
>> This lawsuit will go nowhere... increasingly desperate if they're willing to brazenly manipulate the market like this. IDK... I'm probably missing something about norms or precedents, but allowing selling and not buying is not just brazen. It's straightforward enough that the average person is incensed and understands specifically why. This isn't systemic risk and turtle stack complexity. This is probably my info-bubble, but nihilistic rage of WSB seems to be spilling out into the world. The social media (dischord/reddit) aspects, hedge funds, markets/brokers... it all adds up to symbolic whole that has ordinary people cheering on a bunch of maniacal gamblers. The SEC is looking more like a belligerent than a regulator. Remember that the SEC is, first and foremost, a bunch of cowards.
- alvah 6y ago
  “nihilistic rage of WSB seems to be spilling out into the world” I think it’s the other way round - there are millions of people who feel disenfranchised, cast away, left behind. Their rage has been manifesting in events such as Brexit & the election of Trump. Currently the most visible expression is the GME saga, but the undercurrent of rage is the common factor & I expect it will be more common & more obvious over the next few years, as the elites try to pretend it’s back to business as usual.
  - rootusrootus 6y ago
    > manifesting in events such as Brexit & the election of Trump I want to agree with you, but I have to say that some of the most rabid Trump supporters I know are fellow software engineers earning at least $150K a year, and sometimes much more. What do they feel disenfranchised about, cast away, or left behind? I agree that it's part of the explanation, but it seems to me like there's far more than that going on.
    - alvah 6y ago
      I don't think all Trump supporters (or all Brexit voters) feel disenfranchised. My point is there are a large number of people who do feel discarded by the "system", and when given the opportunity to metaphorically throw a brick through the window of the establishment (or even the appearance of such opportunity), they will do so.
EGreg 6y ago
The real owners of the markets have showed up: https://news.ycombinator.com/item?id=25950306 https://news.ycombinator.com/item?id=25950306
deleted 6y ago
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scythe 6y ago
>Congress will have a few hearings for show, so reps can get face time and claim to be "for the people". That's the Congress of ten years ago. Today we have both parties reeling from a populist revolt and anxious to avoid another one (even as they cynically try to get as many points in as possible). Case in point: among the usual suspects tweeting we heard from one Donald Trump Jr. I doubt that they'll do what WSB wants (whatever that is) but I think there's a relatively good chance of some significant legislation coming out of this. Robinhood seems to have reversed on buying GME, though, at least for now, which pretty much invalidates the lawsuit (but doesn't prove it was useless).
- esyir 6y ago
  Eh, if I dump shit all over your yard, then stop doing it, does me stopping invalidate the earlier event?
voisin 6y ago
I am less cynical or more optimistic. What they did is one of the most egregious acts of malfeasance I’ve ever seen in the markets. If there was ever a case for punishing a company, this is it. If the powers that be fail to do so, then get out the pitchforks and guillotines because this society is beyond fixing.
- DangitBobby 6y ago
  I think there's basically 0% chance that there are any real consequences to anyone except the people trying to make trades on Robinhood.

nine_zeros 6y ago

> This lawsuit will go nowhere. At best a tiny settlement after years of litigation. Congress will have a few hearings for show, so reps can get face time and claim to be "for the people". SEC will wag their finger, might even levy a few hundred thousand in fines. This will be the end of wall street. Or at least, the end of companies like Robinhood. Faith in American systems were already at all time low after last four years and now with this kind of market manipulation at the expense of retail investors, American stock market will be bust. There is zero reason to play in this casino.

dheera 6y ago
Unfortunately the odds of winning in the stock market even buying random stocks are still way better than a real casino, and casinos are still around.
- Andrew_nenakhov 6y ago
  Casinos are OK. Gambling is a special tax applied to people with bad understanding of the probability theory.
  - thatguy0900 6y ago
    I feel like the people who say this have never been to a casino, they're pretty fun. I would wager most people going know they will lose money. Gambling addiction is a real problem, though.
    - rootusrootus 6y ago
      I've only been once. Even knowing I would lose money, I still found the loss/fun ratio really awful, and when I walked out of there I knew I'd never go back. For that kind of money I can buy toys I actually get to keep, or buy an experience worth remembering. Gambling socially, I enjoy. Playing poker with the guys, typically. But the stakes are absolutely tiny, so we really are just playing for fun.
    - Andrew_nenakhov 6y ago
      I knew some gaming addicts. Each and everyone of them was living with feverish hope to win big one day. However, I believe that everyone has a sacred right to destroy themselves in any way they like. If they choose to ignore conscience and indulge in gambling, it is on them.
  - pc86 6y ago
    Preface: I'm totally in favor of people going to casinos if they want to. People say this and chuckle about how witty they are but it's the only "tax" that we let billionaires extract from the poor and act like we're okay with it.
- deleted 6y ago
  [deleted]
- throwaway2245 6y ago
  If you got a bunch of spare money and spare time, enjoy the casino. If you got a bunch of spare money, enjoy the stock market.
linuxftw 6y ago
Wallstreet feeds off of 401ks and municipal pension accounts. Retail investors can't influence the market broadly. Americans aren't going to stop putting money into 401ks and 401k administrators aren't going to stop shoveling money into their friend's 'funds.'
hi5eyes 6y ago
or the media steps in and runs damage control all they have to do is lie for a few months and people will completely forget hell, even if they have to lie for a few years, they already did that with ebil organge man and it only made the public trust them even more pension funds arent going to stop putting money into private equity, today will just make people less inclined to go retail I could see a lot of money leaving wall street for emerging markets over the next 10 years but I dont think a full divestment from american markets will happen in my lifetime
xwdv 6y ago
Where else are you supposed to put your money? Bonds? Real estate? A bank savings account? Good luck. People will not be able to live with their own failures. And where will that bring them? Back to stocks.
- drcross 6y ago
  Crypto enters the chat
  - nine_zeros 6y ago
    This. Alternatives exist and will be created as faith in America keeps falling. The world hasn't run out of smart people.
  - robntheh00d 6y ago
    Hedge funds already game crypto. At the root it’s nation state currency being manipulated. Like in 2008. Privatize the gains and socialize the losses. The entire ledger needs a wipe. It’s pure emotional bias to suggest the future is obliged to carry the debt of the past. There’s nothing in science suggesting such a truth exists.
ThisIsTheWay 6y ago
Robinhood could shut their doors tonight and it would have little impact on Wall St. or the American stock market. Robinhood isn't even in the top 5 for online brokers in terms of assets under management (AUM). Vanguard, Schwab, BAML, Fidelity, and Ameritrade are literally handling trillions of dollars (that's trillions with a T) [0], while Robinhood is estimated to be managing ~$20 Billion. [1] Sure, you could argue that's not all "retail investment", but they are not even in the same ballpark. [0]: https://www.fool.com/the-ascent/research/online-brokerage-statistics/ https://www.fool.com/the-ascent/research/online-brokerage-st... [1]: https://www.brokerage-review.com/investing-firm/assets-under-management/robinhood-aum.aspx https://www.brokerage-review.com/investing-firm/assets-under... EDIT: Added concession in last line that not all in the top 5's AUM is retail, but the point still stands.
- Clubber 6y ago
  It's not about RH at this point, it's about faith in the market. It's like you were winning at the casino and a cop came in, put you in handcuffs, then gave all your chips back to the dealer.
  - homeless_engi 6y ago
    If you count cards, the pit boss will ask you to leave. Personally, not a fan of the casino metaphor.
    - ThisIsTheWay 6y ago
      +1, fully agreed. There are definitely people making stupid bets and losing (like they should, IMO), but the notion that markets are this black box beyond human comprehension is laughable. That's especially true when you filter out the noise and find companies with solid fundamentals.
  - ThisIsTheWay 6y ago
    Again, I think you're overestimating the negative sentiment about the market being driven by the madness that is GME, BB, KOSS, and EXP over the last few weeks. Most retail investors are watching from the sidelines and scarfing down popcorn, not actively participating. You're hearing about a very small portion of the market and extrapolating that out to everyone, but that's simply not the case. Market manipulation is not new, and it's not impacting most retail investment strategies, which are much longer term. This is exposing inequities in the market that have existed for a long time, but I would be shocked if it has a significant impact on the assets of retail investors. As others have said, what other options are there? The game is imperfect, but that doesn't mean everyone stops playing all the sudden.
deleted 6y ago
[deleted]

trhway 6y ago

>SEC will wag their finger I think SEC greenlighted what in my view amounts to a highly illegal action by Citadel/Robinhood (as i think Citadel still has exposure, probably indirectly, on the short side). The situation in its nature does look like the CDS calls which caused the 2008 crisis. I think some "too big to fail" players wrote a humongous amount of GME/etc. uncovered calls (and similarly structured contracts) in the previous months which now threaten to take them down. I mean writing the $100-200 GME calls were practically free money back then while these days it has materialized as the tens of $B liability. Similar to CDS - the statistics practiced on Wall Street permits to have tremendously huge potential liability if it is at a very low probability. When such a low probability event happens though ... hopefully you're too big to fail and the system would then step in to save you by socializing your losses in some way. So, before going outright bailout road which would be tough politically, i think big people decided to try to spread/socialize that "too big to fail" players' loss among the retail investors, and thus the stock buying block for retail investors (i'm voting with my dollar - have a bit of long of AMC).

CamelCaseName 6y ago

With Gary Ginsler at the SEC, who knows?

silexia 6y ago
Please keep in mind that by continuing to allow trades, Robinhood was taking on major legal risks. People have been attempting a short squeeze all week. Short squeezes are illegal. By allowing a short squeeze to continue with no action, Robinhood would have been taking on massive legal liability for aiding and abetting illegal activity.
- u10 6y ago
  They absolutely are not illegal. Shorts got greedy and got caught out. Should short sellers not have any downside to their trades?
  - silexia 6y ago
    https://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm. Control plus F "short squeeze". Intentional short squeezes like what is happening in GME is illegal.
    - Tokelin 6y ago
      Intentional would be the key word. Would it be easy to prove it was intentional?
      - simias 6y ago
        I don't know enough about this subject to form an opinion on the legality and morality of what's hapenning right now but if the only rub is whether the squeeze is intentional or not I recommend that you have a peek at the wallstreetbets subreddit right now. It's very much intentional and out in the open.
    - stransky 6y ago

hoka-one-one 6y ago

I don't understand how you could possibly be angry when you didn't even take the time to read the ToS.

gspr 6y ago
Do you read the ToS for every service that you use?
- matkoniecz 6y ago
  And reread it every time it was changed?
  - hoka-one-one 6y ago
    They notify you when it changes, so yes.
- freeflight 6y ago
  Equating speculative stock trading with opening a Facebook account is a very weird thing to do.
- deleted 6y ago
  [deleted]
- hoka-one-one 6y ago
  Yes.
FabHK 6y ago
You're right, but I'd not make that argument here. I made a similar argument when this recalcitrant doctor was pulled of a United plane a few years back, justified in my view, and in line with the conditions of carriage. But, yeah, HN crowd wasn't pleased. (Many said they'd never fly United again, and most people wouldn't... United share price dropped a bit, then went straight back up to where it was and beyond. Well, until COVID-19.) Edit to add: BTW, the point is not that you should always read the TOS. The point is that you should read the TOS before complaining if something unexpected happens.

FabHK 6y ago

> they're willing to brazenly manipulate the market like this Evidence? The interview below (with CEO of broker Webull) claims that the clearing firms cannot (or don't want to) cover the increased cost when clearing these trades, and told many brokers that they won't open positions anymore, due to the two day settlement delay. In other words, an entirely innocuous explanation.

whoisninja 6y ago
if hedge funds were long, it would have happened? it is short-sellers who need to pay up the margin calls etc. the way short selling works, it can create crazy leverage it is definitely a lie
- JumpCrisscross 6y ago
  > if hedge funds were long, it would have happened? Yes. DTCC changes collateral requirements on securities all the time [1]. The collateral requirements they put on GME aren't even that egregious. Robinhood just didn't want to pay up. [1] Literally, every day. But the haircuts they apply to the last day's market prices are also quite variable.
  - FabHK 6y ago
    Mate, you can't just walk in here with detailed knowledge and settlement mechanics and all. It's a revolution against the conspiracy! </s>
  - zaroth 6y ago
    What does DTCC collateral requirements have to do with retail investors trying to buy shares in a cash account? Stopping margin trading, absolutely. Stopping short selling, of course. But we’re not talking about either of those things. We’re talking about cash-funded limit Buy orders on a duly listed publicly traded stock.
    - JumpCrisscross 6y ago

SilasX 6y ago

>Citadel and gang operate this casino. If they think they're losing, they change the rules so they aren't. Wait, is Citadel a big enough player as to influence the regulatory system, like on the level of JP Morgan or Goldman Sachs?

JumpCrisscross 6y ago
> is Citadel a big enough player as to influence the regulatory system, like on the level of JP Morgan or Goldman Sachs No. They barely avoided going out of business the last time around.
- cde-v 6y ago
  Sounds exactly like JP Morgan and Goldman Sachs.
  - JumpCrisscross 6y ago
    > Sounds exactly like JP Morgan and Goldman Sachs I don't think JPMorgan needed any government intervention. Goldman didn't directly, but if AIG had gone under so would they. (To be fair, so would the entire financial system.) But in the end, both of them got help. Citadel didn't. It wasn't in that club. It is not now. If Citadel failed tomorrow, it would make headlines for a week, and then we'd move on.
    - thedudeabides5 6y ago
      That's what you might think, but since the Volcker rule, a lot of the kind of 'liquidity provision' (aka trading) done in the banks has now been forced into funds like Citadel. Meaning 'too big to fail' applies to hedge funds now just like investment banks. Ala LTCM https://en.wikipedia.org/wiki/When_Genius_Failed https://en.wikipedia.org/wiki/When_Genius_Failed
      - JumpCrisscross 6y ago
        > Meaning 'too big to fail' applies to hedge funds now just like investment banks LTCM wasn't making markets and it was done in by leveraged bets on Russian bonds. The term you are looking for is systemically important financial institution (SIFI) [1]. BlackRock, with $9 trillion under management, is a SIFI. Citadel, with under $40 billion, is not. [1] https://en.wikipedia.org/wiki/Systemically_important_financial_institution https://en.wikipedia.org/wiki/Systemically_important_financi...

this_user 6y ago

What are they even alleging RH did wrong? Any broker is free to decide what the let their customers trade. They could restrict buying AAPL if they wanted to. This is like trying to sue a bar for having stopped serving your favourite beer. There is absolutely no case here.

avereveard 6y ago
found the "should just build their own exchange with their rules!" comment
JumpCrisscross 6y ago
> There is absolutely no case here. There isn't, but I think one can make the case that there should be. At the very least, communication from Robinhood, from the exchanges and from regulators was piss poor. As a result, we have half the internet wrapped up in some Ken Griffin as Gordon Gecko Batman conspiracy theory. Robinhood was criticized for marketing day trading to people who, to a large degree, didn't know better. The counterargument was people knew what they were getting into and were free to do it. Fair enough. This adds a new wrinkle. It wasn't ever a day trading platform! A day trading platform should be able to handle high volumes. It should be able to handle increased collateral requirements. It should be able to handle some market makers going offline. What Robinhood did is contractually allowed. But it flies in the face of what they held themselves out to be. Robinhood sold a turd doughnut, folks said "it's fine, I want a turd doughnut," and then the turd turned out to be uranium.
- this_user 6y ago
  Anyone who has a bit of experience trading the markets saw this (or something like this) coming for days. Just because these people don't know the first thing about market regulation doesn't mean they have a case. What they did was effectively form a public stock pool for the purpose of disrupting the orderly function of the market, and drive up the price beyond all reason. This kind of thing used to happen regularly a century ago until regulation was enacted in order to stem that kind of abuse. If the SEC weren't in what appears to be a coma, they should have enforced those rules days ago by completely halting trading in the stock. But it seems that falls on private companies now for some reason.

boh 6y ago

Various trading halts occur fairly regularly. If it's possible to win a suit against an exchange halting trades, institutional investors would be suing exchanges on a regular basis. Also the creation of the SEC was essentially to protect retail investors from speculative investments (that typically cleaned them out). It would be less likely to see a trade halt as going "against the people" but as a consumer protection practice, so it's doubtful it will be wagging too many fingers at RH.

zionic 6y ago
"halting trades" is not the same as "halting buys only while allowing people to sell in an attempt to crash the price so our biggest customer doesn't lose money"
- boh 6y ago
  It is. Halting trades always produces winners/losers. Retail investors are RH's biggest customers. They're diminishing their risk of suits they'd likely lose/regulatory scrutiny by halting buys. The SEC will more likely hit you for allowing pumps rather than preventing them.
  - Tokelin 6y ago
    How is halting trades the same as only halting buys? By halting trades it is implied selling is also halted.
  - shawabawa3 6y ago
    It's absolutely not the same Trading halts are at the exchange level and stop _all_ buys and sells What happened here is some brokers/clearing houses prevented _retail traders_ from buying, but not from selling
    - boh 6y ago
      Exchanges are able to decide what to halt (obviously since that's what they did). The SEC/class action suits are free to argue the issue, but the likelihood the suit will succeed is low and SEC intervention (beyond an opinion statement) is also low. In the investment space, retail investors are generally treated like children who need to be protected (that's what the SEC is mostly tasked with). RH will make the argument that it was protecting the children from hurting themselves and the SEC will likely go along with it (that's their assumption anyway). Fairness isn't something you generally see in trading.

goatinaboat 6y ago

Citadel and gang operate this casino. If they think they're losing, they change the rules so they aren't. Best investment money can buy is after-dinner speakers fees to people who then show up at the regulators.

wbsun 6y ago

If that's the case, then the cost of violating rules for them is trivial enough that they can simply just keep doing this: 1) pump a stock price by allowing buy but restricting sell, 2) then they short this stock to 100%+, 3) they allow sell but restricting buy to collapse the price. Is the society already working this way?

hirundo 6y ago
I expect a larger cost from violating the trust of their customers. They'll lose many and if they do grow, grow more slowly. It's an advantage to their competitors.
- neltnerb 6y ago
  What is actually interesting to me is that it would be shocking of Robinhood didn't anticipate getting sued over this. It smells and looks like halting trading because their owners didn't like the result. Maybe the lawsuit will fail, but they will obviously take a giant reputational hit and it is fascinating to me that they chose to do that. What is the upside? The only thing that makes sense to me is that the owners of Robinhood have too much conflict of interest with the hedge funds that were losing money (and so are acting against the best interests of Robinhood itself in favor of their funders). Alternatively, maybe they're being honest about it and what's going on at this point has nothing to do with hedge funds and everything to do with what appears to be a scheme to pump up the price and the people that are controlling the narrative sell first. It's unclear what hedge fund is getting it stuck to them at this point, didn't they say they covered their position already? If that is true, then it really does start to look like what started as an interesting way to penalize hedge funds doing this has turned into a bitcoin-style bubble. Which can also be a useful point to make, but a point that is completely disconnected from the desire to screw over hedge funds.
  - gerash 6y ago
    Cryptocurrencies are also extremely volatile but I don't see them disabling the "buy" button when the prices shoot up. I personally am going to switch away from them to some other brokerage. Their app is very well made though so I hope the competition catches up

dalbasal 6y ago

>> This lawsuit will go nowhere... increasingly desperate if they're willing to brazenly manipulate the market like this. IDK... I'm probably missing something about norms or precedents, but allowing selling and not buying is not just brazen. It's straightforward enough that the average person is incensed and understands specifically why. This isn't systemic risk and turtle stack complexity. This is probably my info-bubble, but nihilistic rage of WSB seems to be spilling out into the world. The social media (dischord/reddit) aspects, hedge funds, markets/brokers... it all adds up to symbolic whole that has ordinary people cheering on a bunch of maniacal gamblers. The SEC is looking more like a belligerent than a regulator. Remember that the SEC is, first and foremost, a bunch of cowards.

alvah 6y ago
“nihilistic rage of WSB seems to be spilling out into the world” I think it’s the other way round - there are millions of people who feel disenfranchised, cast away, left behind. Their rage has been manifesting in events such as Brexit & the election of Trump. Currently the most visible expression is the GME saga, but the undercurrent of rage is the common factor & I expect it will be more common & more obvious over the next few years, as the elites try to pretend it’s back to business as usual.
- rootusrootus 6y ago
  > manifesting in events such as Brexit & the election of Trump I want to agree with you, but I have to say that some of the most rabid Trump supporters I know are fellow software engineers earning at least $150K a year, and sometimes much more. What do they feel disenfranchised about, cast away, or left behind? I agree that it's part of the explanation, but it seems to me like there's far more than that going on.
  - alvah 6y ago
    I don't think all Trump supporters (or all Brexit voters) feel disenfranchised. My point is there are a large number of people who do feel discarded by the "system", and when given the opportunity to metaphorically throw a brick through the window of the establishment (or even the appearance of such opportunity), they will do so.

EGreg 6y ago

The real owners of the markets have showed up: https://news.ycombinator.com/item?id=25950306 https://news.ycombinator.com/item?id=25950306

deleted 6y ago

[deleted]

scythe 6y ago

>Congress will have a few hearings for show, so reps can get face time and claim to be "for the people". That's the Congress of ten years ago. Today we have both parties reeling from a populist revolt and anxious to avoid another one (even as they cynically try to get as many points in as possible). Case in point: among the usual suspects tweeting we heard from one Donald Trump Jr. I doubt that they'll do what WSB wants (whatever that is) but I think there's a relatively good chance of some significant legislation coming out of this. Robinhood seems to have reversed on buying GME, though, at least for now, which pretty much invalidates the lawsuit (but doesn't prove it was useless).

esyir 6y ago
Eh, if I dump shit all over your yard, then stop doing it, does me stopping invalidate the earlier event?

voisin 6y ago

I am less cynical or more optimistic. What they did is one of the most egregious acts of malfeasance I’ve ever seen in the markets. If there was ever a case for punishing a company, this is it. If the powers that be fail to do so, then get out the pitchforks and guillotines because this society is beyond fixing.

DangitBobby 6y ago
I think there's basically 0% chance that there are any real consequences to anyone except the people trying to make trades on Robinhood.