19 ms·

If a physicists tells me something about how the solar system works, they don't have much reason to lie to me. If RobinHood tells me how clearing houses work,

If a physicists tells me something about how the solar system works, they don't have much reason to lie to me. If RobinHood tells me how clearing houses work, they have a huge reason to lie to me. Given what we say in cases like Enron, Bear Stearns, I am shocked and dismayed at the eagerness of Hacker News contributors to so readily accept whatever Robinhood tells them as 100% gospel. Where were all these experts on clearing houses a week ago, warning of this exact risk? Because plenty of people had opinions on Gamestop, that maybe the SEC would halt trading altogether etc, but not a single person mentioned this clearing house liquidity issues until it happened. And I still really can't get a good explanation for why if I had 10k in my non-margin account that cleared over a year ago I can't use that to buy a stock(or withdraw for that matter, though hopefully that's temporary). OR, if people were allowed to sell stock, who were they selling to?? Clearly SOMEONE was allowed to buy! A lot of misdirection around things like margin accounts. Robinhood didn't give any real explanation until many hours later. But they're apparently just "poor communicators." Amazing how a billion dollar company filled with conflicts of interest making a totally unprecedented restriction that actively helps their hedge fund investor simply can't possibly be committing any sort of fraud. Because nobody's ever committed fraud before, a Robinhood press release must be treated as the "facts". This is insanity . Robinhood are not the "experts" in this case, their version of truth is probably the least reliable of all parties.

CabSauce 6y ago
I don't think anyone is saying "we don't need to investigate". They're saying "let's find evidence before we assume malintent".
- koheripbal 6y ago
  The internet mob does not wait for pesky delays of "evidence"!
deleted 6y ago
[deleted]
stcredzero 6y ago
If RobinHood tells me how clearing houses work, they have a huge reason to lie to me. If there are enough mechanisms of "Crony Capitalism" at play, to cause most of the trading apps in existence to halt trading, this is definitely something that needs to be investigated. Likewise, if there are enough of these crony mechanisms involving collusion between Facebook, Twitter, Square, Stripe, and Visa targeting people, this also warrants investigation. It seems to be part and parcel the same sort of thing. People have been calling stuff like this out since the 80's! https://en.wikipedia.org/wiki/Manufacturing_Consent https://en.wikipedia.org/wiki/Manufacturing_Consent
Aunche 6y ago
I don't take what Robinhood says at face-value because they have proven to be a sketchy-ass brokerage. That said, I still find their statements infinitely more valuable than baseless conspiracy theories floating around. Why would Citadel risk jeopardizing their lucrative relationship with Robinhood just so they might be able to successfully manipulate the market?
dudeinjapan 6y ago
Maybe not apples-to-apples, but... I worked on Lehman's Tokyo electronic trading desk in 2008. When we went bankrupt, it wasn't our clients, or even the exchanges which stopped our trading. It was our clearing banks. Interestingly, we weren't cutoff uniformly in all markets. NY desk was trading about 75% of regular volume for 4 days into the bankruptcy before someone (SEC?) told them to knock it off. There's a lot going on in Robinhood's back office and legal teams of which we are not aware. While I'm as pissed as anyone that they shutoff trading, I'm open to the idea that the shutoff was for far more mundane reasons than collusion with Citadel and Point 72.
- mgleason_3 6y ago
  “I’m as pissed as anyone that they shut off trading,” Robinhood did not halt trading or shut off trading. Robinhood prevented _buying_ Gamestop and only allowed selling. That’s entirely different. It can only do one thing - drive the price down which is market manipulation. It’s supposed to be illegal.
  - dudeinjapan 6y ago
    Playing devil's advocate, it's possible that the lawyer/clearing bank/regulator gave the instruction to cutoff all trading in the name, and cutting off only buys was the lesser of bad options. (Had they also cutoff selling, it would have been even worse!) Reading the SEC's letter (in the OP), you can clearly see the SEC wants everyone to sell out of their position and make this whole thing go away. RH no doubt has an army of lawyers and compliance people whose entire jobs/careers is to predict what the regulator wants and proactively be their lapdog. (The regulators meanwhile are completely free to be Monday-morning quarterbacks and retroactively assess fines to anyone, despite providing no concrete guidance of what to do in an unprecedented situation like this one.)
  - mlthoughts2018 6y ago
    They did halt both buying and selling of net new positions. They did not halt adjustments of existing positions (calls & shorts). This was actually a very fair, by-the-books standard trading halt. It just happened to benefit the short sellers who had been squeezed because they could easily find people willing to sell. You definitely could still buy GME if you found some extremely random call option holder who needed to sell to cover their position. This would not be changing a net new position, just like selling to someone looking to cover a previous short, and this was never blocked - it’s just there was no volume for this, nobody owned calls and needed to sell.

CabSauce 6y ago

I don't think anyone is saying "we don't need to investigate". They're saying "let's find evidence before we assume malintent".

koheripbal 6y ago
The internet mob does not wait for pesky delays of "evidence"!

deleted 6y ago

[deleted]

stcredzero 6y ago

If RobinHood tells me how clearing houses work, they have a huge reason to lie to me. If there are enough mechanisms of "Crony Capitalism" at play, to cause most of the trading apps in existence to halt trading, this is definitely something that needs to be investigated. Likewise, if there are enough of these crony mechanisms involving collusion between Facebook, Twitter, Square, Stripe, and Visa targeting people, this also warrants investigation. It seems to be part and parcel the same sort of thing. People have been calling stuff like this out since the 80's! https://en.wikipedia.org/wiki/Manufacturing_Consent https://en.wikipedia.org/wiki/Manufacturing_Consent

Aunche 6y ago

I don't take what Robinhood says at face-value because they have proven to be a sketchy-ass brokerage. That said, I still find their statements infinitely more valuable than baseless conspiracy theories floating around. Why would Citadel risk jeopardizing their lucrative relationship with Robinhood just so they might be able to successfully manipulate the market?

dudeinjapan 6y ago

Maybe not apples-to-apples, but... I worked on Lehman's Tokyo electronic trading desk in 2008. When we went bankrupt, it wasn't our clients, or even the exchanges which stopped our trading. It was our clearing banks. Interestingly, we weren't cutoff uniformly in all markets. NY desk was trading about 75% of regular volume for 4 days into the bankruptcy before someone (SEC?) told them to knock it off. There's a lot going on in Robinhood's back office and legal teams of which we are not aware. While I'm as pissed as anyone that they shutoff trading, I'm open to the idea that the shutoff was for far more mundane reasons than collusion with Citadel and Point 72.

mgleason_3 6y ago
“I’m as pissed as anyone that they shut off trading,” Robinhood did not halt trading or shut off trading. Robinhood prevented _buying_ Gamestop and only allowed selling. That’s entirely different. It can only do one thing - drive the price down which is market manipulation. It’s supposed to be illegal.
- dudeinjapan 6y ago
  Playing devil's advocate, it's possible that the lawyer/clearing bank/regulator gave the instruction to cutoff all trading in the name, and cutting off only buys was the lesser of bad options. (Had they also cutoff selling, it would have been even worse!) Reading the SEC's letter (in the OP), you can clearly see the SEC wants everyone to sell out of their position and make this whole thing go away. RH no doubt has an army of lawyers and compliance people whose entire jobs/careers is to predict what the regulator wants and proactively be their lapdog. (The regulators meanwhile are completely free to be Monday-morning quarterbacks and retroactively assess fines to anyone, despite providing no concrete guidance of what to do in an unprecedented situation like this one.)
- mlthoughts2018 6y ago
  They did halt both buying and selling of net new positions. They did not halt adjustments of existing positions (calls & shorts). This was actually a very fair, by-the-books standard trading halt. It just happened to benefit the short sellers who had been squeezed because they could easily find people willing to sell. You definitely could still buy GME if you found some extremely random call option holder who needed to sell to cover their position. This would not be changing a net new position, just like selling to someone looking to cover a previous short, and this was never blocked - it’s just there was no volume for this, nobody owned calls and needed to sell.