This is probably legit, unlike delisting it. You are taking a loan from them with the understanding that they can (in some circumstances) liquidate your investment to lower their own risk. This absolutely seems like one of those circumstances.
It’s like the bank banning selling your home then repossessing it when the value falls.
Crooked entirely.
Apples and oranges. If you bought a house on margin, the way a brokerage defines margin, they would absolutely be allowed to do that. Margin and mortgage are fundamentally different types of loans.
I agree that halting buys was absolutely wrong. Definitely see where you're coming from, if you look at the two actions together..it doesn't paint a very pretty picture.
Except... You can!
If you ever took a mortgage, take a very, very, very good look on the loan agreement.
A surprising amount of banks simply put it as "bank reserves the right to recall the loan in full, at its sole discretion, at any moment"
Margin loans more like a performance bond. Unlike a mortgage, it gets called in when you cannot cover the loan. Speculation with margin is dumb for most people.
Depending on a loan agreement... It can
The last time this has happened en masse was as recently as 12 years ago.
Since then, people started reading loan agreements a bit more carefully, hence the decline in the number of banks demanding completely unconditional recall clauses.
But look further up, and you'll see that their main client (~40% of their revenue), Citadel, is looking at major losses if this keeps going.
These "here's why it's OK" legitimations are sounding just as cynical as the high profile insiders' rage against WSB that we have been hearing.
This is fast becoming a symbol of brazenly rigging of financial systems to ensure the house wins.
Hypocritical appeals to responsibility are half of what's causing all this rage. Sure, a responsible broker might reserve a right to liquidate your position in order to limit their risk. This isn't a responsible broker. They might also liquidate your position to limit their losses at your expense... or because the cabal said to.
We are not starting from the assumption that they (RH, Citadel, NASDAQ,etc... even the SEC) are acting responsibly, or in the interest of "mom & pop." They are playing heads I win, tails your lose... again.
The hedge funds got caught holding $10m puts with $1bn (so far) long tail risk. RH are in some sort of similar position. They make high, steady returns from such positions. Typical insider deal. When that long tail risk materializes, all bets are off... and this is not even a figure of speech!
The asymmetry is dumbfounding. Responsible actors! Market Fundamentals! The hypocrisy of it.
It's a cat and mouse game. This is a once in a lifetime event where you can push everything to extreme limits. As wall street gets more desperate they will resort to extreme and more extreme tactics. The average retail investor is not going for a win. They are trying to make the house expose all of the cheap tricks.
The end result is a checklist of publicly confirmed anti retail strategies.
Short selling above and beyond? Check
Bailouts among wallstreet? Check
Deplatforming? Check
Control conventional media? Check
Prevent buying stocks? Check
Forcibly sell shares? The jury is still out
The price looks just right to me.
All that said, my personal opinion is that they couldn’t check in a code change to handle the increased collateral requirements, so the only feasible and somewhat legal way to save RH was to prevent its users from buying more. Pretty shitty, but then again, ever since RH crashed on 2020-02-29 because none of their devs thought of leap years, I can’t say I expect very much from them technology-wise.
And that's enough to make people pretty not-happy.
It sounds like now that they have a bunch of additional cash in hand they're going to allow (with limitations) GameStop buys again.