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It's always true that the assumed conversations in smokey rooms are inaccurately reported. So sure, nothing about Citadel's role in this story is actually known.

OTOH, in this case, it's genuinely hard to conceive of an alternative story that isn't a cabal story.

Also, in practical terms... most of the action was on robin hood. If other brokers/originators/banks didn't shut down buys then this entire wallstreetbets craziness would flood in their direction.

Q: Did BoM & Merrill Edge shut down trading on #wallstreetbetmadness stocks entirely, or just the buy side? One of the most damning things here is that robinhood only shut down buys. Seems like blatant market manipulation, but I don't really know the rules.

> Genuinely hard

Actually incredibly easy. $GME isn't worth anywhere near $350 or $20B market cap. These people are in a world of hurt when you have WSB spinning stories and encouraging reckless behavior, where some are throwing their last $20,000 into it, which will eventually disappear to $100 unless they passed the buck to some other chump before it all blows up. RH could genuinely believe that the sooner the GME pump stops, the less damage is done to these extremely naive retail investors, because the future naive bagholders flooding in are prevented from throwing their little savings at it.

Brokerage execution halting or not, this story has an incredibly obvious ending, and it's that some WSB pumpers will profit huge, some hedge funds will lose huge, but the majority of WSB will lose immensely.

If RH thought something was fishy, shouldn't they have completely halted GME trading instead of only disabling buys?

Backlash would be even worse. We've already seen a "class action lawsuit" from WSB to Robinhood back in March when RH couldn't execute buy or sell during a few days and people were furious about their options expiring worthless.

People will claim they had no chance to sell GME for $250, after a few days spikes it back down to $20 or so, and they'll claim Robinhood caused them to lose $50k or whatever.

IDK about that. There's a class action regardless, and (IDK, but seems logical) a market manipulation case as well.

Honestly I don't understand how this is even a question. WTF is supposed to happen to the price of an asset if a big chunk of the owners can only sell.

It seems obvious that the claimed damages for the class action lawsuit would be much larger if sell orders were blocked. Since we know with certainty price will crash, claimed damages would increase by the share value of shareholders at time of restriction.

> we know with certainty price will crash

I agree, and yet I seriously doubt even 5% of people saying this have opened a short position, e.g. bought puts.

Well, the far-dated PUT options for GME have almost fully priced in the impending crash at this point. The $320 Jan 2022 PUT price is at $265. I imagine there's still +10% EV at that price, but it's not as compelling as yesterday when it was $240.

Sure. Make sense. There is some precedent for determining damages, and that RH are optimizing for it.

How is this not also market manipulation? Lots/most of the trades on target stocks are trading via RH. RH is restricting the access of buyers, but not sellers. How could this decision not affect/suppress prices.

I will not pretend to guess at potential liabilities of one choice or the other, but the one they made does seem to corrupt the market most.

I guess it's cliche to ask this about a financial scandal but... how is this legal? Can a broker really decide that people can either hold or sell, but not buy a stock?

OK, I'll play :)

Flesh this story out. Who said this to whom? How did it go from here to a decision to shut down buys (but not sells). This isn't vanguard. It's a daytrading app.

Not to mention that this is near suicidal for robinhood. That's why the Citadel story resonates with people.

The only non-cabal story I can think of (I know I said it was hard, but I thought hard... swear) is that they ran out of cash, or are hedged poorly and trying to trade their way out of a hole. Cabal still seems more likely. I wonder how reliant on Citadel Robinhood is for long tail emergency capital.

1. How likely is it BofA-ML has short positions or investments in funds who do?

2. Isn't Citadel's deal with Robinhood dependent on the flow being "dumb" and not having any broad effect on the market? That's obviously no longer the case, if it ever was. Robinhood is still venture backed, so they're feeling the pressure to show growth in users and profits. Is it possible the market for their "much-less-dumb-than-previously-thought" flow has shrunk substantially?

Also, the retail traders involved and the press surrounding them have (accurately imo) painted this as a populist "sticking it to the elites" movement. What if the so-called elites really do want to disenfranchise and mitigate retail investors impact on the market? BofA, Citadel, and peers might have an interest in maintaining the status quo.

> Robinhood was one of many brokerages to implement trading restrictions. e.g. Bank of America/Merrill Edge also shut down buy orders for GME. Citadel does not have the same relationship with these other brokerages. So, to say Robinhood made their decision based on a conflict of interest doesn't hold water.

My issue is those brokerages said they were closing orders because of Apex clearing. Robinhood basically said that they chose to do it themselves: https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

> Bank of America/Merrill Edge also shut down buy orders for GME.

I heard that Bank of America/Merrill Edge was requiring posting a 100% margin as collateral if wanting to buy GME options. I didn't hear that they shut down buy orders for GME stock.