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Robinhood says that they basically couldn't fulfil the buy orders because they ran out of money, or couldn't fulfil the orders without breaking the rest of the

Robinhood says that they basically couldn't fulfil the buy orders because they ran out of money, or couldn't fulfil the orders without breaking the rest of the platform. I imagine whatever the reason there's going to be lawsuits.

josephorjoe 6y ago
Whatever else happens, Robinhood should not survive this. They clearly violated their customers' trust, so their customers should leave them. And I will be completely unsurprised if when the dust settles it turns out they acted illegally. Also, they suck at lying.
- iamacyborg 6y ago
  You may want to check what happened to certain brokers on Jan 15th 2015 before you start chucking accusations out. It’s clear you don’t understand how these brokers work and how they interface with the broader market.
  - cannabis_sam 6y ago
    Is this the Swiss Franc thing?
    - iamacyborg 6y ago
      Yep.
  - josephorjoe 6y ago
    It is completely clear that they betrayed their customers' trust. I know some people think "but that's not illegal so they did nothing wrong". Those people are bad and should feel bad. And I think in this case enough customers are angry that robinhood will not escape the consequences of its actions. I only said I would be unsurprised to learn they acted illegally. I admit the "suck at lying" thing is more my opinion than fact at this point.
    - maxfurman 6y ago
      Do Robinhood's terms guarantee that their users can buy any stock at any time? Does Robinhood in any way ask or imply that their users cannot use another service? I'm just not sure what trust they betrayed here.
      - lixtra 6y ago
        Trust is not covered by terms.
  - adaml_623 6y ago
    Why would you post that without including information about the event and brokers you are referencing. You're not really adding to the information content on this site. I assume you were talking about this event: https://www.leaprate.com/forex/liquidity/algo-traders-worsened-swiss-franc-crisis-january-15-2015-boe-study/ https://www.leaprate.com/forex/liquidity/algo-traders-worsen...
    - iamacyborg 6y ago
      Because if people are going to start playing these games they need to do the bare minimum of research. Their money is literally on the line.
  - renewiltord 6y ago
    And you should read about how that was dealt with in July 2017.
- tootie 6y ago
  As has been stated elsewhere, it is easier to recover from alienating customers than it is from running afoul of the SEC. They ran a very real risk of being forcibly shut down by regulators if they didn't slow trading.
  - Robotbeat 6y ago
    I don’t agree. See Tesla. Elon frakked up with the SEC but not his customers (or his fans) and so Tesla a couple years later is on top of the world. I doubt Robinhood will survive this. They built their whole brand around rallying for the little guy at the expense of the fat cats. It’s literally their name.
    - scythe 6y ago
      Tesla isn't an investing firm. They don't even really have much in the way of acquisitions yet. Tesla would have to do something pretty blatant to really piss off the SEC. Elon's $420 tweet was greeted with a slap on the wrist precisely because "you're new here, aren't you?". The better analogy would be if SpaceX pissed off the FAA.
      - kchr 6y ago
        Tesla actually made an official statement on their website about going private within 24 hours of the tweet. That's what reduced it to a slap on the wrist.
      - finiteloops 6y ago
        Ask and ye shall receive https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99s-spacex-violated-its-launch-license-in-explosive-starship-test-triggering-an-faa-probe/ar-BB1ddMZE https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99...
    - whimsicalism 6y ago
      That's an absolutely awful argument. Elon Musk rich so don't have to bother with the SEC?
- gruez 6y ago
  >They clearly violated their customers' trust, so their customers should leave them. They did? That might be the case according to the Popular Narrative (that the Hedge Funds phoned them and said "shut it down"), but reality is that they couldn't front the deposits for the customer's trades, due to the insane volatility. In that case it's less violating their customers' trust and more having a product that couldn't handle extreme circumstances well. They are a discount brokerage after all, some compromises had to be made.
  - TeMPOraL 6y ago
    The narrative doesn't matter. It's a PR problem. Lots of people wanted to buy GME, then RH suddenly cut them off, offered no reasonable explanation, and then their CEO went on the news to just spew some content-free noise. Sure, there were reasons behind this ban, perhaps good reasons - but they weren't explained by RH, and RH to this moment didn't even admit to the cause of the problem. Sounds like solid ground for loss of user trust to me. See also: https://news.ycombinator.com/item?id=25957097 https://news.ycombinator.com/item?id=25957097.
    - deelowe 6y ago
      The CEO said they couldn't cover deposits. He only started spewing nonsense when the obvious question about RH having liquidity issues came up. He didn't lie to retail RH clients, but he may have lied to RH investors. Then again, it's funded by private equity, so it's likely they know all this. All of this makes sense given the emergency cash infusion of 1B RH got this week.
- stjohnswarts 6y ago
  I don't agree. I think they provide a valuable service they should stay whole IF they can fix their capital issue and make their customers whole. You didn't forsee what was happening and neither did I because it was unprecedented. If not let them sink, someone will provide a similar service and learn from it. The SEC shouldn't be in the market of shutting down companies because a new phenomenon happened, let the market do that, unless something illegal has occurred.
  - josephorjoe 6y ago
    I don't think the SEC should shut them down. I think they should go bankrupt because their customers leave them for one of their many more reliable and trustworthy competitors.
xd1936 6y ago
They over a day to say that. Instead, they decided it was clearer to say "we're temporarily restricting trading due to volatility". If what you said really was the issue... Why not just say that? They're a startup. They'd be forgiven. Why hide behind vagueness?
- partiallypro 6y ago
  I do agree that they bungled the whole thing badly, but I also think they were probably trying to prevent a run on their accounts when they were already cash strapped.
- linuxftw 6y ago
  It's a highly regulated industry. Brokers can't just take actions. Perhaps they hit some regulatory corner case and nobody knows how the SEC is going to react.
franklampard 6y ago
Source?
Aachen 6y ago
I'm somewhat out of the loop. If RH is low on money due to lending it out, then they have to stop lending. But the decision was to stop allowing buy orders on GME if I read and remember that correctly. What's the issue? Don't investors deposit money into their RH accounts and then purchase the stock from that money, giving RH a commission? That should be good for RH, so I'm not getting this. I probably just miss some info, hope I'm not asking a stupid question.

josephorjoe 6y ago

Whatever else happens, Robinhood should not survive this. They clearly violated their customers' trust, so their customers should leave them. And I will be completely unsurprised if when the dust settles it turns out they acted illegally. Also, they suck at lying.

iamacyborg 6y ago
You may want to check what happened to certain brokers on Jan 15th 2015 before you start chucking accusations out. It’s clear you don’t understand how these brokers work and how they interface with the broader market.
- cannabis_sam 6y ago
  Is this the Swiss Franc thing?
  - iamacyborg 6y ago
    Yep.
- josephorjoe 6y ago
  It is completely clear that they betrayed their customers' trust. I know some people think "but that's not illegal so they did nothing wrong". Those people are bad and should feel bad. And I think in this case enough customers are angry that robinhood will not escape the consequences of its actions. I only said I would be unsurprised to learn they acted illegally. I admit the "suck at lying" thing is more my opinion than fact at this point.
  - maxfurman 6y ago
    Do Robinhood's terms guarantee that their users can buy any stock at any time? Does Robinhood in any way ask or imply that their users cannot use another service? I'm just not sure what trust they betrayed here.
    - lixtra 6y ago
      Trust is not covered by terms.
- adaml_623 6y ago
  Why would you post that without including information about the event and brokers you are referencing. You're not really adding to the information content on this site. I assume you were talking about this event: https://www.leaprate.com/forex/liquidity/algo-traders-worsened-swiss-franc-crisis-january-15-2015-boe-study/ https://www.leaprate.com/forex/liquidity/algo-traders-worsen...
  - iamacyborg 6y ago
    Because if people are going to start playing these games they need to do the bare minimum of research. Their money is literally on the line.
- renewiltord 6y ago
  And you should read about how that was dealt with in July 2017.
tootie 6y ago
As has been stated elsewhere, it is easier to recover from alienating customers than it is from running afoul of the SEC. They ran a very real risk of being forcibly shut down by regulators if they didn't slow trading.
- Robotbeat 6y ago
  I don’t agree. See Tesla. Elon frakked up with the SEC but not his customers (or his fans) and so Tesla a couple years later is on top of the world. I doubt Robinhood will survive this. They built their whole brand around rallying for the little guy at the expense of the fat cats. It’s literally their name.
  - scythe 6y ago
    Tesla isn't an investing firm. They don't even really have much in the way of acquisitions yet. Tesla would have to do something pretty blatant to really piss off the SEC. Elon's $420 tweet was greeted with a slap on the wrist precisely because "you're new here, aren't you?". The better analogy would be if SpaceX pissed off the FAA.
    - kchr 6y ago
      Tesla actually made an official statement on their website about going private within 24 hours of the tweet. That's what reduced it to a slap on the wrist.
    - finiteloops 6y ago
      Ask and ye shall receive https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99s-spacex-violated-its-launch-license-in-explosive-starship-test-triggering-an-faa-probe/ar-BB1ddMZE https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99...
  - whimsicalism 6y ago
    That's an absolutely awful argument. Elon Musk rich so don't have to bother with the SEC?
gruez 6y ago
>They clearly violated their customers' trust, so their customers should leave them. They did? That might be the case according to the Popular Narrative (that the Hedge Funds phoned them and said "shut it down"), but reality is that they couldn't front the deposits for the customer's trades, due to the insane volatility. In that case it's less violating their customers' trust and more having a product that couldn't handle extreme circumstances well. They are a discount brokerage after all, some compromises had to be made.
- TeMPOraL 6y ago
  The narrative doesn't matter. It's a PR problem. Lots of people wanted to buy GME, then RH suddenly cut them off, offered no reasonable explanation, and then their CEO went on the news to just spew some content-free noise. Sure, there were reasons behind this ban, perhaps good reasons - but they weren't explained by RH, and RH to this moment didn't even admit to the cause of the problem. Sounds like solid ground for loss of user trust to me. See also: https://news.ycombinator.com/item?id=25957097 https://news.ycombinator.com/item?id=25957097.
  - deelowe 6y ago
    The CEO said they couldn't cover deposits. He only started spewing nonsense when the obvious question about RH having liquidity issues came up. He didn't lie to retail RH clients, but he may have lied to RH investors. Then again, it's funded by private equity, so it's likely they know all this. All of this makes sense given the emergency cash infusion of 1B RH got this week.
stjohnswarts 6y ago
I don't agree. I think they provide a valuable service they should stay whole IF they can fix their capital issue and make their customers whole. You didn't forsee what was happening and neither did I because it was unprecedented. If not let them sink, someone will provide a similar service and learn from it. The SEC shouldn't be in the market of shutting down companies because a new phenomenon happened, let the market do that, unless something illegal has occurred.
- josephorjoe 6y ago
  I don't think the SEC should shut them down. I think they should go bankrupt because their customers leave them for one of their many more reliable and trustworthy competitors.

xd1936 6y ago

They over a day to say that. Instead, they decided it was clearer to say "we're temporarily restricting trading due to volatility". If what you said really was the issue... Why not just say that? They're a startup. They'd be forgiven. Why hide behind vagueness?

partiallypro 6y ago
I do agree that they bungled the whole thing badly, but I also think they were probably trying to prevent a run on their accounts when they were already cash strapped.
linuxftw 6y ago
It's a highly regulated industry. Brokers can't just take actions. Perhaps they hit some regulatory corner case and nobody knows how the SEC is going to react.

franklampard 6y ago

Source?

Aachen 6y ago

I'm somewhat out of the loop. If RH is low on money due to lending it out, then they have to stop lending. But the decision was to stop allowing buy orders on GME if I read and remember that correctly. What's the issue? Don't investors deposit money into their RH accounts and then purchase the stock from that money, giving RH a commission? That should be good for RH, so I'm not getting this. I probably just miss some info, hope I'm not asking a stupid question.