This should scare the crap out of Robinhood from what happened yesterday.
They clearly violated their customers' trust, so their customers should leave them.
And I will be completely unsurprised if when the dust settles it turns out they acted illegally.
Also, they suck at lying.
The better analogy would be if SpaceX pissed off the FAA.
https://www.msn.com/en-us/news/technology/elon-musk-e2-80-99...
The best thing is to not frak with either the SEC or your customers. And that’s probably always an option, even if it might mean sacrifice.
They did? That might be the case according to the Popular Narrative (that the Hedge Funds phoned them and said "shut it down"), but reality is that they couldn't front the deposits for the customer's trades, due to the insane volatility. In that case it's less violating their customers' trust and more having a product that couldn't handle extreme circumstances well. They are a discount brokerage after all, some compromises had to be made.
Sounds like solid ground for loss of user trust to me.
All of this makes sense given the emergency cash infusion of 1B RH got this week.
I think they should go bankrupt because their customers leave them for one of their many more reliable and trustworthy competitors.
Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?
They made a few thousand dollars and got months in jail for it.
The problem with wsb is that it has gotten so big and there are too many involved at this point.
It's that there's really no appetite in the federal government for going after retail traders. Retail trading as an industry took a very long time to build and ham-fisted enforcement could tank it harder than a few lawsuits ever could.
Make no mistake, this was going to happen eventually. There's infinite ability to gather information, infinite ability to share it. Retail collusion was inevitable. The people who built the industry knew it was going to happen. They prepared for it. Everyone, including the SEC, knew it was only a matter of time before something like this happens.
Denmark did that because there's much greater financial regulatory capture than there is here.
I am very certain that most of retail traders who buy GME at 400 will end up losing money.
It's clear that everyone should be lawyering up depending on what positions they had when they started pumping this idea to the masses. That said, I'm a big believer in "a fool and his money". If there are hedge funds or retail investors out there who, perhaps, didn't understand all the risks of what they were doing, protecting them from their folly only causes more problems in the future.
As horrible as this sounds, now is the time to let everyone fail. Hard. If we don't, no lessons will be learned.
Regulated entities who have access to tools or information not available to retail investors, or who applied financial pressure to manipulate access to the markets, or did not disclose conflicts of interest...that seems like a much easier case to make.
We will probably see a few retail traders get burned, and I suspect anyone wanting to do trading in the future is going to have to fill out more disclaimers.
Given the track record of holding the powerful accountable is terrible, I don’t think this is directed at hedge funds but is a warning to the little people.
But why does this sort of thing seem to be the norm? https://en.m.wikipedia.org/wiki/S.A.C._Capital_Advisors
Criminal prosecution is held to a much higher evidentiary standard than civil fines. Almost all market related crimes, including manipulation and insider trading, require mens rea. Proving state of mind beyond a shadow of a doubt is really difficult to do. Especially when the defendant is sophisticated enough to know the law and have access to high-quality legal advice.
Any US Attorney would absolutely love to have the feather in his cap of sending a billionaire hedge fund manager or investment banker to prison. Hell, the reason Rudy Giuliani is a household name is because he managed to do that. But no prosecutor is going to bring a case that he has no chance of winning.
Given that it makes much more sense to target enforcement with civil fines rather than criminal prosecution. You can tie up your resources to fight expensive, hard to prosecute criminal cases. Or you can quickly settle for reasonable fines, and cover many more cases with the same set of limited resources.
That's clearly not about random people commenting on an internet forum.
It may still be about specific people commenting on an internet forum, but those people would know it's about them.
It failed mind you. The shorts are still bleeding and the GME hold is continuing though just at a slightly reduced price.
Retail investors who have bought GME can afford to wait out the antics of hedge funds, but those funds are on borrowed time to try to turn the loss of a century into some kind of win, or they are done for good. Ask yourself, who do you think is trailing the borders of legality? A teen who goes “hmm GME at 100$? Sure why not, I’ll take 10” or the hedgefond manager calling all his friends to stop trading because his fund is going bankrupt on a stupid bet he made that he would have gotten away with if it wasn’t for those meddling kids.
People like you make fun of the QAnon-types but you're just as willing to indulge in deranged evidence-free conspiracy theorizing as long as it accommodates your ideological priors.
Whether hedge fund managers did make a call to their buddies is not the only thing in question here (although the SEC will surely determine the truth). Shorting a stock drives the price down and, while this is no less legal than buying a stock, the question is whether shorting 136% of the stock counts as outright manipulation. Reddit kids have done nothing but pop an artificial bubble, they did not participate in manipulation; as the hedge fund managers and their buddies claim.
> QAnon
I have yet to see the baby cookbook or other evidence of their ridiculous claims.
> whether shorting 136% of the stock counts as outright manipulation
I refer you to the snarky top comment about how all the Dunning-Kruger victims who claim manipulation do not actually know what manipulation is. Shorting a stock is not manipulation and neither is lots of people deciding to short a stock. 136% of the stock is shorted because a lot of people were shorting it, not because Some Guy decided to single-handedly short 136% of the float.
> Reddit kids have done nothing but pop an artificial bubble
So GameStop was an artificial bubble at $10 but not at $500? Really?
Did I claim that? I wouldn't touch GME with a barge pole.
There is surely some deeper non public reason that every single retail broker - but no single institutional broker - stopped accepting GME buys but kept honoring sells. It might or might not be a call from hedge fund buddies, but it is still likely illegal.
When I was working at a hedge fund, I once executed a few hundred mil notional on a supposedly anonymous exchange, taking advantage of an obvious counterparty mistake.
Within 10 minutes, I got a call from said counterparty, telling me that next time I do that, they’ll make sure I’m kicked off the exchange.
Anonymous my ass. Legal my ass. And yet, it happened - I’m sure I wasn’t the first or the last - the other side kept making those mistakes. I stopped taking advantage of them. This kind of behavior is rampant in Wall Street. Only difference is it has been done now in the open, very visibly, and with thousands - perhaps tens of thousands - identifiable victims.
1. For lying about that reason to customers
2. for not shutting down all trading on their app (allowing sells of GME without manipulated the market, even if blocking sells would also have bad effects)
3. For allegedly tipping off Citadel before shutting off GME trading (unconfirmed but they will likely investigate this claim)
But many people seem to think that the SEC will punish them simply because they stopped allowing people to buy more GME.
"Big fish" were still able to get an account manager to process their trades while the button buy was disabled for everything else.
There's also a seeming conflict of interest with Citadel's involvement in both RH and Melvin.
Those who are anti-WSB thinks it a warning to WSB.
1. preventing people from buying GME at, whatever, $300 might not have been disadvantaging them, and
2. it might not have been unduly inhibiting their ability to trade, but duly so.
Your bias even makes you defend Robinhood’s action to disable cash accounts buying certain stocks as DULY.
Wow
Specifically calls out retail investors (i.e. WSB). I read it the opposite way, but I can see how it could be interpreted as a warning to both.
140% shorts, including naked shorts from Melvin?
RH stopping buys but allowing sells?
Conclusive proof that Citidel put their finger on the scales to force RH's actions?
WSB's members constantly chanting hold/diamond hands/ride to the moon?
There's a lot at play, and further examination will make for a good post mortem...
WSB isn't regulated, that is companies like Robinhood
Good on the SEC for stating they stand with retail investors, even if it ends up being hollow it sure is nice to hear them say it.
this is all hypothetical, which is why I used the word if. If they did what WSB is accussing them of, which I think is probably doubtful, RH is in really really big trouble...