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Why? Surely them blocking buys for any individual (or even small group of them) is within their rights per their customer agreement. But blocking them en masse

Why? Surely them blocking buys for any individual (or even small group of them) is within their rights per their customer agreement. But blocking them en masse is market manipulation, and their tos isn’t going to protect them from that.

542458 6y ago
My understanding is just because something meets the layman definition of, say, “market manipulation” doesn’t mean it meets the legal definition of that. This also applies to things like recklessness - the legal definition and the layman definition are different. Furthermore, AFAIK it’s not that something like “market manipulation” is illegal - it’s usually more complex than that, and might only be illegal under circumstances XYZ. It’s tempting to read laws as if they’re written in plain English, but it’s really more like a specialized dialect where words and phrases have different (and often complex) meanings.
austhrow743 6y ago
Market manipulation requires intent to artificially change the stock price. It isn't everything that changes the stock price otherwise any large organisation or person with clout would be constantly market manipulating all day long.
- peterthehacker 6y ago
  The argument that Reddit/WSB users manipulated the market is a more difficult one to make vs. the argument that RH manipulated the market when they restricted their users to only sell GME. If they stopped both buying and selling then GME would not have dropped the way it did. RH CEO’s denial said they made the move to protect the firm and their customers, but blocking buying and selling would’ve given them the protections without the risk of causing a change in the price. So it’s hard to believe that RH’s intent was anything but pushing the price of GME down to cover their customer’s short position.
  - austhrow743 6y ago
    That reddit/wsb didn't market manipulate is in no way an argument for robin hood having market manipulated. Again, it's fine to do things that cause stock prices to move. That robin hood could have reduced their functionality further in order to affect the stock price less is not relevant. If they have some duty to go out of their way to minimise their impact on stock prices, its above and beyond regular market manipulation.
    - abotsis 6y ago
      So when they reopened limited trading and prevented people who already had positions from acquiring more, how did that help their case that it was done because of their obligations to their clearing house? If they said “ok, everyone can purchase 5 additional shares” it’d be one thing. But they said “nobody can acquire to own more than 5 shares”. Some of those shares people owned were already settled....
      - nrmitchi 6y ago
        Honestly, as someone who writes software, my first guess is that "per user rate limiting of new, unsettled individual security positions" is most likely not something that was built in to their product. It's also not something to YOLO out into production during an extreme volatility event when people are already mad at you. Adding a static check of holding was likely much more straight forward. In traditional Robinhood-style, this decision prioritized growth (allowing new users to still sign up and buy) I guess a different alternative would have been just selling as much GME until they reach the maximum they could make the obligations for, but then it probably would have been considered less "fair" (if one person could buy 1000 shares, and then no one else can buy any). You may not agree with Robinhood leadership, or Robinhood as a company (I know that I don't), but this can really be thought of as a #hugops moment where they had to figure out how to track down and address the root of these (multiple) issues in real-time. They most definitely did not come out with the "best" solution.
  - peterthehacker 6y ago
    Looks like I fell for a “conspiracy theory” here... I’m going to avoid any stock-market related comments on HN from here on out :p

542458 6y ago

My understanding is just because something meets the layman definition of, say, “market manipulation” doesn’t mean it meets the legal definition of that. This also applies to things like recklessness - the legal definition and the layman definition are different. Furthermore, AFAIK it’s not that something like “market manipulation” is illegal - it’s usually more complex than that, and might only be illegal under circumstances XYZ. It’s tempting to read laws as if they’re written in plain English, but it’s really more like a specialized dialect where words and phrases have different (and often complex) meanings.

austhrow743 6y ago

Market manipulation requires intent to artificially change the stock price. It isn't everything that changes the stock price otherwise any large organisation or person with clout would be constantly market manipulating all day long.

peterthehacker 6y ago
The argument that Reddit/WSB users manipulated the market is a more difficult one to make vs. the argument that RH manipulated the market when they restricted their users to only sell GME. If they stopped both buying and selling then GME would not have dropped the way it did. RH CEO’s denial said they made the move to protect the firm and their customers, but blocking buying and selling would’ve given them the protections without the risk of causing a change in the price. So it’s hard to believe that RH’s intent was anything but pushing the price of GME down to cover their customer’s short position.
- austhrow743 6y ago
  That reddit/wsb didn't market manipulate is in no way an argument for robin hood having market manipulated. Again, it's fine to do things that cause stock prices to move. That robin hood could have reduced their functionality further in order to affect the stock price less is not relevant. If they have some duty to go out of their way to minimise their impact on stock prices, its above and beyond regular market manipulation.
  - abotsis 6y ago
    So when they reopened limited trading and prevented people who already had positions from acquiring more, how did that help their case that it was done because of their obligations to their clearing house? If they said “ok, everyone can purchase 5 additional shares” it’d be one thing. But they said “nobody can acquire to own more than 5 shares”. Some of those shares people owned were already settled....
    - nrmitchi 6y ago
      Honestly, as someone who writes software, my first guess is that "per user rate limiting of new, unsettled individual security positions" is most likely not something that was built in to their product. It's also not something to YOLO out into production during an extreme volatility event when people are already mad at you. Adding a static check of holding was likely much more straight forward. In traditional Robinhood-style, this decision prioritized growth (allowing new users to still sign up and buy) I guess a different alternative would have been just selling as much GME until they reach the maximum they could make the obligations for, but then it probably would have been considered less "fair" (if one person could buy 1000 shares, and then no one else can buy any). You may not agree with Robinhood leadership, or Robinhood as a company (I know that I don't), but this can really be thought of as a #hugops moment where they had to figure out how to track down and address the root of these (multiple) issues in real-time. They most definitely did not come out with the "best" solution.
- peterthehacker 6y ago
  Looks like I fell for a “conspiracy theory” here... I’m going to avoid any stock-market related comments on HN from here on out :p