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Comment by xirbeosbwo1234 | Hacker News Reader

Of course you can. Happens all the time.

>with their money

With your money. Most people are trading on margin, because they're gambling addicts.

EDIT: I'm not sure if it's most that are trading on margin. Certainly it's everyone I've seen, but people who share their trades publicly are probably not representative.

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Robinhood could put a margin freeze on trading these stocks on margin or borrowing against shares of GME. It would protect them and be fair to retail investors.

This is what I don't get. Why do they care if an investor is buying GME shares with their own money? They could easily disable margin trading. I can't point to anything other than blatant manipulation.

If we assume for a moment that Robinhood is acting in good faith (Seems like a stretch but work with me here).

It's possible they are doing this to protect investors. It's pretty clear GME is going to crash at some point in the near future. Having thousands of investors on their platform go broke at once is just bad for everyone (who isn't short). By blocking these trades, RH is protecting investors from potential loss.

In a way, it's almost like preventing someone from investing in a Ponzi scheme. While it might piss you off, it will save you in the long run.

Of course... that's assuming RH is acting in good faith.

I see what you’re saying. But I said in another comment that Robinhood has made it super easy over the years to do all kinds of irresponsible trading and have benefited from it. Today seems like a convenient time for them to be concerned about investor risks. This and their involvement with Citadel makes it hard for me to give them the benefit of doubt.

I guess I wasn't clear... I don't necessarily think RH is acting in good faith. I was just suggesting what I feel is the only possible good faith explanation. Not that I believe that is the case.

No, I get that it was an assumption. I was just saying how even if I assume they were acting in good faith, it doesn’t make sense to me.

Better late than never?

I can understand complaining about getting thrown out of a casino for winning too much. I can't understand complaining about getting thrown out for losing too much. The people "investing" in these companies are totally clueless and the majority of them are going to lose all their money. Cutting them off is clearly in their best interest.

Whether or not that kind of paternalism is acceptable is another matter.

So just disable the margin trading instead of blocking all Buys?

I think you're confusing options with margin. Most of the major WSB screenshots are options trading and are not on margin. Specifically they are nearly all call options being posted, which pose no risk to the brokerage.

Likely that Citadel sold lots of uncovered calls to RH users.

No you really can't. The right to refuse service gets weird with trading platforms because if you're found to be doing because you're trying to influence the market then you're in hot water.

Can you imagine a trading platform just outright refusing to process your orders because it was better for them?

And what about the right to refuse helping people buying a stock that is being actively manipulated by people who have made thousands of public comments delcaring their intent to manipulate the price?

Very few retail investors trade on margin as it includes the brokerage holding on to significant amounts of your assets which many small retail investors just don't have.

It requires $2000 in the case of Robinhood. Reeeeeaaaaallllyyyy onerous.

A lot of the WSB members only invested for a few shares - less than $100. They were doing it for fun not profit. Requiring $2k is a big ask for this crowd of investment

Then they stand to recover about twenty cents from a lawsuit. Good for them?

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