Comment by bboygravity | Hacker News Reader

Comment by bboygravity | Hacker News Reader

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Who would've thought that scamming people isn't a good business-model in the long term?

RH pretends to be a "broker" and:

1. lets people trade "stocks" that aren't stocks the way people think they are. All (convenient) trades (for its HF clients) get internalized and never ever hit any lit market/exchange. The fact that this is possible is a general issue with the US stock market and lack of meaningful regulation and policing. This is not unique to RH: https://www.youtube.com/watch?v=wg8onYvJW3Q

2. its entire business model revolves around selling a "front running service" to RH's hedge fund clients, so they can front run RH's users/retailers (who are NOT clients) on every single trade. The front running service is called PFOF and is illegal in a lot of countries, but not in the US.

3. Literally turns off the buy button temporarily when it's convenient for its hedge fund clients to manipulate a stock price to go in their desired direction. This is so mind-blowing that I probably need to provide a source. Here it is one: https://www.investmentwatchblog.com/robinhood-president-sold...

too bad this is apparently not common knowledge. Let de down-voting by RHs few remaining social media managers begin.

Source on your first point? Sounds a conspiracy from r/superstonk

Yeah the 1st point is a "conspiracy" in that it's simply not true and what people who dislike Robinhood share amongst themselves as truth.

Robinhood has lots of problems, this is not one of them.

[edit] Forgot about fractionals where this statement is true, but that's well known/accepted?

Yes counterfeit stock trading by RH is a conspiracy. But the fact that it happens in the US is not really a conspiracy as it has been documented quite thoroughly. A source/book about it is "Naked short and greedy".

Internalizing trades however is less of a conspiracy. Almost all US brokers do this or offer this trade routing option.

Here's the head of the SEC stating that almost all retail market orders on any broker never hit a lit exchange and are internalized: https://www.youtube.com/watch?v=wg8onYvJW3Q

Sadly, I can't converse with you if you're willing to modify your original statements. Guess we should've quoted it.

Originally this was talking about "fake/not-real ownership of the underlying stock", but now it says (quoting for good measure):

> 1. lets people trade "stocks" that aren't stocks the way people think they are. All (convenient) trades (for its HF clients) get internalized and never ever hit any lit market/exchange. The fact that this is possible is a general issue with the US stock market and lack of meaningful regulation and policing.

Now you're saying "internalized trading". Well this is 100% true - of all brokerages. So this no longer makes RH bad vs anyone else... you like Robinhood now?

I removed the reference to synthetics, because it is indeed a conspiracy/speculation (there can't really be evidence for it even if it's true). Though it has happened in the past and has been documented. Source: "Naked short and greedy" book.

There are some more hints though for the whole synthetics conspiracy ongoing. The most recent one, going on right now, being the GameStop stock split through stock dividend failing in Germany, because of DTC/DTCC issues.

These types of splits are not uncommon (Google did one a couple of weeks ago without any issues: https://capital.com/google-stock-split) and I've never heard of a stock split failing due to clearing issues before.

So there's that.

I think the OP meant buying partial stock? afaik those are not real trades; robinhood has to house the trades on their books to some extent

Every brokerage does that with fractional shares though. It’s not unique to Robinhood.

DTCC holds shares. Everything else is just on brokerage books.

What’s the difference between PFOF and actual front running in the Flash Boys sense? Why is PFOF considered legally legit?

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