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Comment by ta1234567890 | Hacker News Reader

Unfortunately, RH most likely made the decision already taking into account the potential costs of making it (including lawsuits and fines by regulators). Their alternative was probably “biting the hand that feeds them”, hence more likely an existential risk to them.

Being cynic about it, nothing of consequence will come out of this. RH will just pay up and continue business as usual. WallStreet will have successfully crushed the little guys, ironically, doing the same they are complaining about, market manipulation. And in the future people will think twice before attempting something like this again.

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I dunno, if wall street had let the bubble burst, and WSB gets scared off with losses, this all could have gone down as "stupid emotional plebs and their tulips". But now that there is definitely lawsuit material, the bigger questions are now firmly part of the narrative and will continue to unfold in the media probably long past the extent of the bubble.

They probably should have let it proceed.

I won’t speculate on the legal matter, but it sounds like a good witch hunt!

Really, a few rich targets may likely suffer (...or not, when it is so likely deserved).

I’m concerned that many Elanors, who’s teachers’ pension fund & retirement plans, were potentially compromised here.

I don’t think pensions belong in hedge funds is the bottom line.

(Combining unaccredited investor portfolios might look something like combining subprime loans, but...)

I think it's important to realize that all these knee jerk reactions were shown to be incorrect only 3 days later, but most people will never hear the truth. The truth is that the FTCC increased Robinhood's capital requirements, and they did not have the funds to meet this. Thus they could not allow buy orders legally, although they could allow cell orders because that would reduce their capital requirements.

Good point about keeping the game alive. I can't blame RH for making whatever call is in its best interest to survive. Whatever the outcome is here I hope it's transparent.

For RH to survive? They robbed us blindly this week. They created a buying dip on the backs on panic selling & people lost fortunes. This company is done for.

>RH most likely made the decision already taking into account the potential costs of making it (including lawsuits and fines by regulators).

Yep. It's very possible that RH just knowingly violated whatever rules/regulations in full expectation that this would still be in their long-run best interest, particularly if they were financially exposed in whatever ways on the shorts that were generating losses. We'll see how this works out for them - they'll take a reputational hit but honestly most people do not have an incentive to leave the platform other than smoldering moral outrage or because they think that GME-like opportunities will continue to present themselves in the future (unlikely imo.)

I’m not sure it’s that simple. They pissed off their most loyal and active customers. I doubt they’ll be back. What to say RH will not do this again in the future?

They picked their company name evoking a certain moral ethos, and the first time their customers consciously acted on that ethos, they pulled the plug.

Whether you agree with that ethos or not, I think we can at least agree that RH lacks the courage of its convictions.

I think it's more accurate to call the name manipulative marketing and what we're seeing is just a company out to make money and save its ass.

Much like Facebook, RH’s users are not its customers. RH’s actual customers are no doubt thrilled with what the company has done.

And, much like Facebook, if you fail to deliver the product (customer data or customer trades) to your actual customer, you're still done. Their customers are surely thrilled by this Harakiri-maneuver.

You mean their investors?

Well, what are people going to do about it?

Look at Facebook and Google, they keep abusing their users, but without a good alternative, there’s very little to do about it.

Edit: eloquently put by a sibling comment, the issue isn’t having an alternative today, but what would happen when those other alternatives are faced with the same conflict of interest as RH is facing, and the answer is that they would probably react the same way, here’s the link: https://news.ycombinator.com/item?id=25947300

Thread on alternatives to Robinhood. https://news.ycombinator.com/item?id=25946366

There numerous retail equity brokers that now offer free trades, mobile apps, and every other feature provided by RobinHood. Unlike Facebook, there is no network effect and unlike Google vs other search engines, different brokers are largely fungible.

There's alternatives to Robinhood though. Robinhood doesn't have the same social network effect as Facebook.

There are a lot of brokers though

This suffers from the illusion that there always is some "choice" or power average people have if a big entity pushes them around in the market.

>doubt they'll be back

Going where instead? Perhaps going to nowhere and not investing anymore, but if that's the alternative RH won't lose much on the margins vs if the "free market" wasn't really just a meme.

We live in a financial oligarchy. If we didn't, this blatant corruption with no recourse wouldn't be happening.

> Going where instead?

To another brokerage? This question doesn't make sense. RH isn't the only brokerage around, and there is a mass migration of people into other brokerages. Their app is currently at 1.0 stars.

If other brokers had the mass of users attempting this same trade, it would have been halted there as well. I guess time will tell.. we can't run the experiment over again.

But the fact RH would simply throw its customers away to appease hedge funds tells you something about who's in charge.

To be clear I'm not saying people won't "want" to go somewhere else that let's them trade how they want to trade (though the low friction and UX on RH itself needs to be re-implemented to equate a like for like substitution), and I agree they should and RH deserves to get ruined by users leaving en masse... I'm saying they won't be allowed to do so if another instance of this same dynamic occurs. Additionally, that there are calls for censorship of wsb, the future co-ordination on social media is also in question

All the pretty UX in the world doesn't mean a thing if there's a pretty message in the app saying that you are not allowed to do the thing you want to do.

I'm not sure. Plenty of brokers are still allowing trades. I can buy and sell on Vanguard in my brokerage account right now. If there's an issue with my trade I can call them, they show their phone number on the confirmation page.

They have some warnings amounting to "this thing is crazy, we'll do our best", but they haven't stopped me from trading. Other brokers are the same.

I think Robinhood cost themselves their business today. Anytime someone says "what broker should I use" the first answer is going to be "not Robinhood, they screwed everyone over" regardless of how true that statement is. I think the industry is about to come under fire too. Heads are going to roll on this one. Action across the board is widely supported by both sides of government. If it is even close to as bad as it looks, Wall Street firms just cost themselves much more than their short positions.

Schwab has a note that they're limiting volumme on specific stocks today. I agree with the point that any of the major brokers would have done the same, but I think that's more an indictment of all of these organizations than a defense of RH.

I'm just not sure about that until I see the volume and see that as a reason for them to not let me buy a security. They can have their systems go down... I mean obviously that's not ideal but that's something that could happen due to volume - but Robinhood didn't go down. Vanguard didn't go down. I can still buy via Vanguard right this second - what does the volume have to do with it?

There are plenty of brokers which are being migrated to right now that are not stoppping trades. European brokers not at all, and in the US Fidelity and Vanguard are still accepting trades (and handling the massive sign-up influx).

Furthermore, the fact that EU brokerages are not stopping trades is something to be considered, no?

They won’t cuz they r going bankrupt. Pull funds & watch the rest.

It completely defies the vision and purpose of their company. They should at least change it to Robbing Hood

robbingood

The people behind RH may come back, but the brand seems to be burned at this point. We're not talking about a non-tangible issue here like Facebook abusing their users' privacy. Customers see their raw money being lost by this service.

The GME move is costing BILLIONS to hedge funds, at that scale I’m sure the costs of a million dollar fine is taken into account.

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