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Comment by cmdli | Hacker News Reader

Legally speaking, Robinhood is a private entity with no obligations to provide users the ability to trade. Users can still sell or trade their assets out of Robinhood, they just can't open new positions with Robinhood's platform. Users are free to use another platform if they so wish.

Not saying its moral or not incredibly corrupt, but I can definitely see Robinhood having the legal equivalent of "our platform, our rules" here.

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> Legally speaking, Robinhood is a private entity with no obligations to provide users the ability to trade.

This is mostly false. trading platforms are regulated by a bunch of orgs like the SEC, they absolutely cannot do whatever they want, there are heavy regulations on these activities or it would be easy for a broker to scam their clients out of their money with backroom deals with this or that third party and create conflict of interests.

Those regulations still allow brokers some freedom in how they run their business, and even require brokers to take actions like this (according to some interpretations). AFAIK, there isn't an SEC regulation requiring all brokers to provide services for every stock. In fact, brokers have limited the buying and selling of stocks in the past, so there is precedent here.

The SEC is also extremely strict about market manipulation, and especially when there's a conflict of interest. RH uses Citadel which had billions of dollars invested into Melvin. RH is saving its partner billions of dollars with this action to the detriment of its actual users.

No they don't. All trading platforms are bound by SEC and federal regulations. The terms "broker" and"market maker" aren't slang words. There are strict requirements for platforms who do business under these financial titles.

Nah. FINRA and the SEC eat this kind of argument for lunch. It's Robinhood's platform, but they have to follow the law just like anyone else.

"Fair, orderly, and efficient markets" doesn't mean that you take away someone's seat at the table just because he's winning. If it were Pershing Square driving the long side instead of r/WallStreetBets, there's no chance in hell that Goldman (Ackman's PB if I'm not mistaken) would block opening trades.

> Legally speaking

Do you actually know the rules? Brokers are highly-regulated, and their job is to give a fair trading platform.

> Do you actually know the rules?

Brokers have been doing this for decades; it's clearly within the bounds of what they are allowed to do [0]. Maybe this lawsuit can prove that they are conspiring with hedge funds to manipulate the market (which would be illegal), but just this act alone is not illegal.

[0] https://www.cnet.com/personal-finance/robinhood-app-td-ameri...

Short squeezes happen all the time and RH does absolutely nothing about it. The only time they stepped in was when their partner (Citadel) had an investment in a firm that was losing billions of dollars. I think the burden is on them to prove this wasn't manipulation because it's otherwise so blatant.

Except that it is clearly market manipulation.

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