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Comment by liquidify | Hacker News Reader

Their actions were directly responsible for a huge number of people being financially ruined and another significant group financially benefitting (who happened to be their friends). They don't legally get to pick and choose market winners and losers. Their responsibility is to administer access to markets, not dictate the outcomes. Their privileged control over the markets, and their actions to protect their powerful friends are a clear example of insider trading, albeit dressed up in a slightly different way than we normally see.

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That's not how any of this works.

Feelings of injustice run hot, but the rules are the rules, and it was following the rules that resulted in the effects you describe. The rules even make sense, which I know doesn't help those that assumed they would face no obstacles while trading.

This isn't a feeling of injustice. This is a direct action by a CEO and his company that by all standards meets the definition of insider trading.

>>> The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

These guys had access to confidential information, and they prevented trading, and allowed specific trading that was to their own advantage.

This is a near textbook example of insider trading except that it wasn't the CEO who directly made the advantageous trades. But that makes no difference. This activity fits both the definition and the spirit of insider trading.

This is vastly different from insider trading - they're not even comparable issues. You could at least reasonably argue a case for market manipulation (though I'd still disagree).

You can't say this is insider trading unless you generously expand the definition of insider trading to include every kind of wrongdoing in the market. Robinhood executives didn't trade GME and didn't have any nonpublic information.

These definitions matter.

Their actions meet the definition nearly exactly. The only difference is that Robinhood didn't directly execute the trades. However, the party making the trade doesn't matter. If insider information was used to benefit someone else, it is still illegal. And this case, it is clear that Robinhood acted in close coordination with 3rd parties to benefit themselves and their friends. The actions they took and the order they took them could not have occurred without Robinhood sharing insider info.

> Their actions meet the definition nearly exactly. The only difference is that Robinhood didn't directly execute the trades.

So...not "nearly exactly" at all. Moreover Robinhood isn't even an insider with respect to GME.

Robinhood gave privileged information regarding the details of securities to various capital groups, who directly benefitted. The 'exactness' of meeting the definition is a moot point. They certainly meet the spirit of the definition, and if we want to argue semantics, then yes they meet the exact definition.

> Robinhood gave privileged information regarding the details of securities to various capital groups, who directly benefitted.

No it didn't, because it didn't have privileged information about the securities. Just because it's a broker doesn't mean it has privileged information about the securities it brokers. Brokers do not typically have privileged information about the securities they broker. To have privileged information, Robinhood would need to be an insider to those securities. Which it isn't.

I don't know what else to tell you - your understanding of the conditions required to meet the SEC's definition of insider trading is simply incorrect. You need to revisit the specific definitions of "insider" and its impact on confidentiality and fiduciary duty.

They didn't get to pick and choose the winners. As volatility of the stock rose, clearinghouse collateral requirements increased. They didn't ask for collateral requirements to increase. Coming up with billions of dollars on short notice isn't easy for most companies (although they did, it just took a few days). There wasn't any choice but to stop trading if they wanted to remain in good standing.

This is the exact kind of shallow level of analysis that masquerades as meaningful insight and is especially susceptible to being turned into hyperbolic headlines and memes that ultimately become misinformation for the public. This is the exact same way the stock price became overinflated in the first place.

Stopping trading for certain groups while selectively giving privileged information and allowing trading for groups of friends is not the same thing as stopping trading for everyone. It is unethical at best, and more likely against the law.

> Their actions were directly responsible for a huge number of people being financially ruined

Wallstreetbets pumping penny stock is directly responsible for it. They tricked tons of people who had no understanding of what’s happening and no exit plan into believing it’s a fight with evil guys, that will leave you with big profit. Both of those were BS.

I’m interested to know why you’re placing the blame on Robinhood.

They would have carried on trading $GME if they weren’t called up at 3am by NSCC with a demand for $3 billion security.

I’d be interested in knowing how the NSCC came up with this figure and why they deemed their approach as acceptable.

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