Hacker News Reader

Comment by 0x426577617265 | Hacker News Reader

It's probably purely a math question -- what's cheaper impending lawsuit (we can settle) or losing our trade?

My theory is that no market makers want to buy the orders Robinhood is selling anymore.

Yeah the whole point of selling your orders is that retail traders are mostly "uninformed" and likely won't move the market. WSB basically showed that's not always the case.

Not that I agree with it, but one of the talking heads on Fox Business was blabbering on about how retails investors should not be allowed to move the market because they're are unlicensed and don't understand the implications of their actions, hah.

we only allow mindful criminals, not newbs

I think there's something to that though. Whats to stop big firms from posing as many retail investors if there's no regulation against that class of investor manipulating the market?

I don't have the answer but its something to think about.

That makes no sense though. It's like arguing what if someone uses a car to commit a murder while pretending to drive it normally.

The answer is the same in both cases, law enforcement needs to investigate and catch it. If they can't, too bad, there are a lot of undetected crimes in the world, doesn't mean that we have to prohibit normal activities to stop them at any cost.

I think its more like suggesting private drivers might need a driver license as well even if most drivers plan to drive legally.

Are you suggesting the licensing and regulation does nothing? Do you think the big firms should be treated the same way as retail investors because crimes will be caught either way?

I'm in no way a proponent of big firms but I think its important to think about what kind of under regulated trades are happening.

many small coordinated investment to hide a large movement are already illegal

I'm not sure about that. Higher end trading platforms have automated buy strategies that spread the bids across time so as not to cause the market to spike.

Yes, but the licensing makes it easier for regulators to regulate, no? Why need a license for anything if they have no regulatory advantage?

It would not be difficult, or unconstitutional, for Congress to pass a law restricting the trades that non-accredited investors are allowed to make.

They do that already. The "public" markets are the stocks that non-accredited investors are allowed to trade.

So you’re saying the house caught you catching cards? :p

I would like to think if they lost the lawsuit they would get fined by the SEC of a fine more than what they would have lost. But, it'll probably less so from a maths point of view it's best to break the law.

"If the penalty for a crime is a fine, then that law only exists for the lower class."

- Final Fantasy Tactics

True, there needs to be an SEC investigation and jail time.

If the claims of this guy: https://twitter.com/justinkan/status/1354853920762253315 are true, I find this might be quite possible.

Jail time. I'm laughing. No one will go to prison over RH temporarily prohibiting its users from placing buy orders on a few particular stocks due to collective market manipulation through social media. There is nothing illegal about RH's actions, despite the faux outrage.

"Collective Market Manipulation" so ... that is what we are calling buying stocks now?

No... Collective market manipulation is what we are calling thousands of people reading the threads on wallstreetbets and hyping stocks with one another.

If RH signaled to its hedge fund investors that it would be making this change in advance and those funds entered into new short positions with that information, would that open both parties up to additional liability?

I believe so, and someone says that’s what happened. https://twitter.com/justinkan/status/1354853920762253315

someone says that’s what happened

Well, if someone said something on the internet, then it must be true!

https://www.warren.senate.gov/newsroom/press-releases/senato...

https://twitter.com/AOC/status/1354830697459032066

What about regulations?

That statement calls for "the SEC and other financial regulators to wake up and do their jobs". If this were about solving the problem rather than scoring points she would have left a clue to what she thought their job was in this case. There isn't one. She can't be so oblivious as to think it's obvious.

I heard there was an existing regulation about selling > 100% of a float short?

Why are you contrasting those two things? Don't they BOTH get sued AND lose retail trade volume by restricting these tickets?

The parent company/investor/whatever has a major short position on GME. By preventing Robinhood users from buying, they are reducing pressure on the short squeeze.

Since Robinhood doesn't collect commissions there's no loss of revenue on trade volume. But driving GME's stock price down is definitely saving Citadel billions, and the class action lawsuit is unlikely to cost them billions.

I mean if you have a bunch of really really angry retail shareholders that want literal blood (which many of them sound like they do) then it's not the person being sued that gets to decide to settle.

Reply on news.ycombinator.com