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Comment by umvi | Hacker News Reader

> due to the unreasonable risk involved in brokering your position, we have closed your X shares of GME for an average price of Y

What in the world??

"In order to protect you from yourself, we have taken away your free will. Thanks!"

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Yes, that is how it works when you buy stock on margin and do not have the cash to cover. When the price dips, the risk increases to the broker, and so they may liquidate your position to cover.

I see. I think that's a critical piece of context missing in that tweet: "Note: these particular shares were bought on margin. Buying on margin is borrowing money from a broker to purchase stock"

I thought RH was forcibly selling a customer's stocks that the customer had previously purchased with their own money.

Where does tat say "to protect you from yourself"? Reads to me a lot more as "since brokering your position is an unreasonable risk to us, we stop doing so" (and the right to do so is likely lined out in their ToS)

Could you expand on what the risk to Robinhood is here? From what I understand, users purchased stock for money. What is Robinhood holding here that can create risk for them?

Some users purchased stock for money. Others purchased the right to buy stock later. Still others trade on margin, or, borrowed money. Robinhood offers all three, and it's not clear which this is, since it conflates the first and the third in the UI.

Ahhh, I see, understood. If RH (or any brokerage) tried to sell shares of stock I owned outright (i.e. exchanged USD for a share at market price) I would be livid. But it sounds like this article is maybe overblown.

Thanks for the clarification!

The company that owns Robinhood is the same company that was shorting all the GME stocks.

Right, I’m aware. I don’t think that’s a valid defense for what RH did today and was curious to hear if others thought there was a valid defense. If RH is just calling in open margin orders, then that’s just the game. If RH is selling outright owned securities, that’s wrong.

I was primarily commenting on the framing. The RH message never pretends it isn't acting in RHs interest, so the representing it as a "we knows what best for you" doesn't make sense.

I don't know if it's only about shares on margin or how the process exactly works behind to judge if there actually is a threat to RH or not.

you are using their brokerage. their rules. free will has nothing to do with it.

It's not possible for someone like me to purchase a publicly traded security without going through a broker. So what you're saying is that market participants can only participate if they do what the people making the market want?

Well they now have 1 star on both app stores and can say goodbye to their upcoming IPO. While it is true their rules may have specified such a situation (I'm not a lawyer and not sure how legal this is), they are still a platform that rely on user trust, and they just destroyed any they had. You can't really call yourself "robin hood" when you bow over to the first big guy that shows up.

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