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Comment by offby37years | Hacker News Reader

Liable for what exactly in this instance?

Liable to get on the SEC, and industry's bad side.

Regulators are (intentionally) designed to be able to exert pressure with a lot of discretion. The financial industry is having a ferocious rage fit. The NASDAQ CEO even went on air calling for immediate SEC regulation... the irony didn't even seem lost to him.

Getting on the industry and SEC's bad side is the liability, and that kind of pressure is a big part of hw the SEC actually "regulates." It isn't strictly through rules.

Customers use a trading platform for access to buy and sell on stock markets. If one day you prevent me from doing that but don’t tell me before I sign up when you would restrict my ability to interface with the market it seems like a interference.

Platforms are there to enable interface with market, not decide what I can and cannot buy from that markets.

I think the parent comment is suggesting that the very powerful people in hedge funds could use their power to create severe consequences.

Some folks on WSB may know what they're doing, but many folks are joining Robinhood and buying GME and AMC due to the hype and that they heard they can make a quick buck. When GME eventually crashes, many of them will lose a fair bit of money and blame Robinhood for the poor experience.

This is not a concern specific to gme

If Citizens United says money is speech, the financial system effectively has no guard rails

Except when it does for the institutions

You have been reading too many memes. Citizens United does not say money is speech.

Citizens United says specifically that when a bunch of people take their money and get together and start a new corporation (Citizens United) (a not-for-profit corporation in this case, though not a charity) and the corporation proceeds to engage in political speech (by filming a movie named Hillary: The Movie)...

then the corporation, as an entity, is considered to have the rights like the right to free speech, because it is owned by people who have rights, and this is a way for those people to exercise those rights together. Therefore this political speech is protected by the First Amendment, and restrictions on it are evaluated on the standard of strict scrutiny, and the FEC cannot halt this distribution just because the corporation was using money to make it happen.

(You will notice that people are not allowed to band together and exercise the right to vote, and thus corporations don't get to vote.)

The financial system has _many_ guard rails including licensure (see the FINRA exams), regulations and regulatory bodies, and orders to halt or limit trades and positions on volatile securities.

This concern is relevant to GME, BB, AMC, etc. because folks are joining Robinhood, Webull, and similar apps in record numbers in a rush to jump in on these hyped-up opportunity.

And what if their decisions cause it to crash?

I think that both things can be true: people are going to get screwed, and fiddling with the rules in the middle of the game is a really bad look.

I'm not arguing either of those (and wholeheartedly agree with you). I'm simply stating a potential concern/justification that Robinhood may have or use.

I think this is a reasonable attempt at "what RH did was right", although I'd certainly be happier if the timing and coordinating were brought to light:

https://www.bloomberg.com/opinion/articles/2021-01-28/robinh...

Right now the retail investors are winning. But imagine if they lost tons of money instead. You might have regulators yelling that Robinhood is not doing enough to inform and protect their customers from self harm. Or even that they were encouraging risky behavior.

If the stock plummets 90% in minutes are they capable of allowing half their users (the amount that owns GME) to exit their positions? Probably not

Go look at past instances of Robinhood going down and the amount of people who claim they're going to take action because of lost money

Aren't there circuit breakers that prevent individual stocks from falling that fast?

Aren't we complaining about a kind of circuit breaker here?

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