It’s really kind of ironic. People are knee-jerk blaming RH for closing margin positions because they didn’t fully understand how they work and the risks involved. Simultaneously, the same people are blaming RH for stepping in the way of what very certainly would have turned into a bad trade for a lot of people.
I don’t take RH’s side but it’s hard to see a winning play for them, it’s damned-if-you-do-damned-if-you-don’t.
Nonsense. People are allowed to make bad trades every second of every day without protection from the platform; but now they develop a conscience and save people from themselves? If this is true, RH and other platforms pulling smiliar stunts should be sued out of existence. Might not be a bad idea to significantly increase taxation on derivatives trading too.
but now they develop a conscience and save people from themselves?
No, RH is saving their own asses from the poor financial decisions of their clients. They don't want to be on the hook when those accounts crater along with GME.
If this is true, RH and other platforms pulling smiliar stunts should be sued out of existence.
Take it up with the SEC. Oh, wait, the SEC is at least partially responsible for such rules being in place. It's a conspiracy, I tell ya!
This morning Robinhood conspired with Citadel to halt trading amid a short ladder sell to drive the price lower, allowing shorts to cover their losses with no competition.
This is blatant market manipulation and anti competitive behavior, and must be stopped.
Why does everyone insist on protecting billionaires who insist on playing the game with a different set of rules than the rest of us?
GME purchases blocked this morning on apps where Citadel is the clearing house.
SOMEONE proceeds to ladder short sell GME to cause a massive price dump.
Users are margin called from previously profitable positions (without being able to provide buying pressure needed to fight against a ladder short sell)
Shorts are able to unethically cover your position.
Read into this... it's all over the news and verifiable with documentation from various regulatory agencies.
Every time someone asks you for evidence, you claim that you gave it somewhere else without linking to it, or pretend that you can psychically detect that someone is a "shill."
However, they should have inserted some notice in the UI that this was a result of a margin call that couldn't be met, given the level of knowledge of many of their users.
Yes, that's the big question here. If it's a margin trade, the broker is also a lender and has some discretion. If it's a cash trade, the broker has no risk and should not interfere. Does anyone know? This matters.
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.
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.
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.
Browing the top of reddit right now is really reminiscent of /r/The_Donald, particularly the shift from a bunch of 'ironic' jokers to conspiracy theories and shouty chest beating and calls for upvotes.
I'd treat anything like this with a huge pinch of salt.
Yes, something can be true but not proven. I for example believe that the elections were rigged and that Trump actually won. It could be true but I got not proof so it stays in the realm of theory.
Not just Reddit. It's here too. It's wild to see people being whipped into a frenzy in real time.
I'm following the discussions a bit, lots of comments by people spreading conspiracy theories, comments asking for evidence are just downvoted, or met by the conspiracy theorist's favorite, "do your research", comments spreading disinformation like "citadel owns robinhood" with a tweet as the only source, people who have no idea how market functions talking about "naked shorting", etc. The disinformation spreads faster than it takes to rebut it.
Someone not wanting to explain what is in 50 news articles to new commenters does not make them a conspiracy theorist, why should they do your google searches for you?
Someone not wanting to explain what is in 50 news articles to new commenters does not make them a conspiracy theorist, why should they do your google searches for you?
Yes, this is definitely one of the cookie-cutter responses. Dubious claims of "so many sources" but they are just super busy and can't be bothered to link to a single one.
Honestly, I'd say a lot of time there aren't any "legitimate sources" to prove the claims being made. That's a good chunk of the problem, because it seems that legitimate investigation and "linking" of said facts to prove the claims is next to impossible without serious government-level powers of acquiring evidence. So inference needs to be used, unfortunately. And once you start inferring without direct evidence, you start sounding like a conspiracy theorist, which is now being used to shut-down dissent and questioning.
It's not like a journalist right now can tell Robinhood "give us all your internal emails so we can verify the reason you've stopped trading these stocks". Or "Hey Discord, let's look at your internal slack comms so we can figure out what evidence you had to conclude that the WSB chat rooms were filled with hatespeech." Or "give us a data-dump of all the users and comments you identified as hatespeech".
How about some regulation in that regard? Hey EU? Here's an idea for a possible scenario and how it could look:
1. Public company makes contentious claims.
2. Curious individual (maybe journalist) makes formal request for data to confirm.
3. By law, company above is obligated to provide access.
4. Individual gets given a secure-room, no-data-copying-allowed physical access to inspect and analyze said data.
Excellent points, well said. If any claims that were not immediately supported by secret video were not at least thought about then no investigations would ever start. At this point the allegations are 50/50, either true or false, the onus is on our regulators/journalists/whistleblowers to investigate and find out if the claims are true.
If someone is saying "This morning Robinhood conspired with Citadel to halt trading", that is a claim. If I ask for source on the claim and they say "It's in the logs, go see for yourself?", my, and most other people on this sites assumption is "This person has no evidence of this claim, or any evidence they do have is eminently debunkable". Handwaving the claim away as "It's obvious" when to most people, "no it isn't obvious whatsoever", or in the worst case "It obviously is not", marks you at best as uninterested in having a real conversation, at worst a conspiracy theorist.
Maybe you shouldn't assume that? Sure sometimes there will be no evidence, but you should only come to that conclusion after you shake off the laziness and go look. Again, someone not wanting to tell you something that you can easily check out yourself does not make them a conspiracy theorist by default. I'm sure you are special enough in your mind that every poster you reply to should take time to type you a personalized response but that is not the case. However, I think you are special.
One of the most common techniques of making a class of people seem crazy is associating conspiracy theories with them. CIA has been doing it for nearly a century by now.
To be specific, we're in the land of confirmable and obvious.
Consider:
* Most conspiracy theories are false.
* Many conspiracies do exist. I've seen people involved in a few.
In conspiracies, people keep secrets. Ergo, there's a poor mapping between actual conspiracies and conspiracy theories. People are speculating with no evidence. On the other hand, the conspiracies I've seen, you haven't heard of, and you probably won't.
The CIA is quite literally the US government covert agency set up to meddle in foreign affairs. It's raison d'être is to:
1. Collect covert intelligence for the US
2. Undermine enemies of the US / support friends of the US
A vague statement like "The CIA is involved in conspiracies" or even slightly less vague "The CIA lies and sometimes vilifies people" are almost vacuously true. That's literally what a covert government agency is designed to do.
A conspiracy theory is much more specific. "The CIA assassinated [leader] on [date] by [some action that looked like an accident] in order to [favorable outcome]." Most of those, with blanks filled in, are paranoid nonsense. If the CIA is doing it's job, I'll never find out about whom it assassinated or why. On the other hand, a blanket statement like "The CIA sometimes engages in assassinations" is obviously true. We have plenty of records from times the CIA slipped up.
As far as associating people with crazy by associating conspiracy theories with them, we're not even at the level of CIA. We're at the level of municipal politics, divorce cases, executive battles, and corporate PR smear campaigns.
If the CIA isn't involved in conspiracies, where are my tax dollars going?
One of the top posts on WSB this morning was a supposed Robinhood engineer who overheard a call between their CEO and the White House instructing them to stop trading $GME. The /r/The_Donald comparisons seem apt at this point.
You don't think any of the high finance billionaires who were losing billions of dollars reached out to the people in the government whose campaigns they funded for support?
Calling this a conspiracy theory is...inaccurate in my opinion.
Justin Kan, founder of Twitch and Atrium(net worth over 9 figures) tweeted that he got a tip that Citadel(the company that executes trades for Robin Hood) reloaded their shorts before they told Robinhood to stop allowing users to buy GME.
If you think Kan is a conspiracy theorist making baseless accusations, we see the world very differently. Which is fine. Diversity of thought is always welcomed in my opinion. But I am curious how you can have that opinion. It seems so clear to me, so I'm a bit confused as to how someone can hold the oppsite view.
If there's no evidence backing it then it is a conspiracy theory, whether coming from an anonymous Reddit post or from a billionaire's Tweet. I don't know Justin Kan's background but he could very well have his own angle behind all this, or just faulty information. And even if he is correct, he is saying something very different from the post I mentioned.
It seems clear to me that you don't become a billionaire by leaving evidence of your ill acts. Certainly not when the spotlight of the entire country is on you. If you don't mind me asking, do you interface with these kind of people? I don't and I'm wondering if you have some kind of insight I'm missing.
> If you don't mind me asking, do you interface with these kind of people?
Yes, I do, multiple people in fact (which I refuse to name drop). That’s why I replied to you the way I did in my other sibling comment. Him tweeting it means somebody told him, and likely he trusts that person. Billionaires are humans like anyone else, they sometimes trust the wrong people. They can also fall victim to “hearing what they want to hear”. They also have a lot of folks who want to win favor with them and thus will intentionally or unintentionally take information out of context and oversell it as something it isn’t. The ultimate point is that thinking a billionaire won’t possibly be misled/deceived themselves and then share wrong info (Elon Musk has had this happen a few times as an example, but he’s far from alone), or won’t deceive others for their benefit (there’s a “household name” in the US that immediately comes to mind as an example, leave it to you to decide who I mean), just seems naive to me.
Thank you for sharing your experience in such a thorough manner. Makes sense to me, and I agree.
I was definitely assigning him some kind of value that he may or may not have based on his success. Thanks for pointing out this flaw in my train of thought.
> I was definitely assigning him some kind of value that he may or may not have based on his success.
Which is definitely reasonable, but my point was that doesn’t necessarily lead to the conclusion you assumed. Hope I’ve helped, but either way, have a wonderful day yourself!
Donald Trump is a billionaire. It is also plainly clear that he has conspiratorial thinking and is often fooled by completely incorrect information. Somebody being a successful tech entrepreneur has almost nothing to do with being able to develop deep understanding of rapidly changing situations off third hand evidence.
I would believe Justin got that tip but that does not mean it was true.
It doesn't even make a lot of sense as the part of Citadel that executes trades cannot talk to the part of Citadel that takes short positions, and vice versa.
You really believe that the departments don't communicate? Once again, finding out that a lot of people see the world very differently than me. Why don't you think they communicate? It seems so clear to me that the departments work in cohort behind closed doors.
Probably because it’s the law that there’s barriers put in place, that’s why? Like some communication will inevitably happen, but there are compliance teams who’s job it is to ensure it’s at a minimum.
In my mind I was assuming that there is some communication between the two groups. Not at work, and definitely not where you can be overheard, but it just seems crazy to me that they don’t talk at all. But I’ve never been in a position to actually know, im just assuming.
I’m sure there is some friendly banter, but I also assume they’d not risk it. Compliance in this context would be very invasive to an average person not in the field, like monitoring your communications, social media, call logs, etc, so I’m not sure they’d risk just casual banter of prohibited topics.
> Justin Kan, founder of Twitch and Atrium(net worth over 9 figures) tweeted that he got a tip that Citadel
So rich people are never lied to by people they trust? I get it, you trust him, but thinking just because he “has a source” saying it doesn’t automatically makes it factually correct. Maybe it is, but appeals to authority and essentially calling anyone who disbelieves crazy doesn’t compute for me.
Movements like /r/The_Donald ended up with attempted insurrection, dead people, guns and pipe bombs confiscated. Are you suggesting we might have another one coming, this time directed at the Hedge fund managers?
A canceled buy order is very different from an automatic sale. Buy orders can be canceled all the time for various reasons, though in this case it's likely Robinhood's well-documented purchase restrictions.
If you have a margin account, the broker calculates a risk based margin and can close any position they wish if they deem it a risk. They don't have to give you any justification. With increased buying power comes increased risk.
In some sense this was basically inevitable. Robinhood allowed (perhaps even encouraged) a huge mass of clueless investors to flood into the market. As long as the going was good, nobody complained, but as soon as things go south, people have started to learn expensive lessons.
This is not the first time this has happened. Almost every single market stress for the past 20 years has caused grief to retail in some way as they were caught out on something they didn't know about.
One clear example that comes to mind is when the Swiss national bank has removed the currency peg and a whole bunch of FX retail has made the expensive discovery that stop limit orders are not guaranteed to execute...
I assume Gamestop the company (and all the people they employ) are better off than they were a week ago. Maybe there won't be many lasting positive effects from having their stock briefly worth a lot more than it rationally should, but on the other hand you could make a reasonable case that they have been significantly harmed by short sellers, and that if a bunch of hedge funds lost their shirts because of their short positions they'll be more careful about shorting Gamestop or any other company in the future. Maybe that's a good thing.
There is no “end of day” only requirement on margin calls. A brokerage firm could margin call you 2min after the market opened, as an example. The trigger is when your account is out of balance with the established risks the brokerage is willing to extend to you, which they can change the criteria at will.
RH is getting sued for market manipulation. This is the inevitable result from that. RH may very well be guilty in all of this, but not for these margin calls.
The fact that this margin call happened at the bottom, but this user likely could not have closed their position themselves 15 minutes earlier at a better price, seems like it should be illegal if it is not already.
If you're long on margin, the position will of course be closed when the stock price drops (and the value of the position (= stock price * number of stocks minus margin loan) approaches zero), not when it rises.
And it was impossible on RH and other brokers to buy more shares, selling (liquidating a long position) was always possible, AFAIK.
Robinhood's behavior here is wicked and wrong. Yes, Robinhood's EULA technically allows them to do this wicked thing. The same EULA says that Robinhood can't be sued over it or anything else.
It's about time we talk about how it's not in the public's interest to allow companies to put arbitrarily user-hostile terms in their user agreements.
The challenge in this case is that many people want this. They see it as only fair that the little guy should be allowed to invest on the same (sometimes user-hostile) terms as big institutions do. If you pass a new regulation saying that margin calls feel scummy so nobody can offer small investors a margin account, is that really a win for small investors?
EULA allows them to close out a margin call, but not sell shares held for a client. Selling held shares without a standing order from the client is illegal, no matter what an EULA says.
It is in their T&Cs that they can do this if your account is trading on margin. If not, then it feels like there's a potential for a class action lawsuit.
For anyone saying, "Most likely trading on margin"
Remember:
This morning Robinhood conspired with Citadel to halt trading amid a short ladder sell to drive the price lower, allowing shorts to cover their losses with no competition.
This is blatant market manipulation and anti competitive behavior, and must be stopped.
Why does everyone insist on protecting billionaires who insist on playing the game with a different set of rules than the rest of us?
You have to admit, though - that is disingenuous. Those plays were profitable, no need to call them (unless there has been irresponsible behavior on the behalf of the broker)
That is entirely up to the broker. They make no guarantees to you that they'll underwrite your risk taking with no limits. If you don't want this to happen, go to a reputable broker and make sure you are not trading on margin. This is not rocket science, but does require a basic level of understanding.
I agree that this is the technically correct definition of how margin is typically utilized, and that investors should be prepared for this in the case of high volatility.
The fact does remain, though, that the way the data is presenting itself seems to indicate that there was disingenuous behavior on the behalf of market makers and a number of hedge funds. To be seen, I guess.
I mean, assuming manipulative self-interested disingenuous behavior on the part of market makers and hedge funds on a daily basis is usually a safe bet. Also on the part of nearly anyone interacting with the stock market who has the power to do it. It's kind of the whole game. True, that may not be how they teach it to you in high school.
> You trade with robinhood's money, then they can decide not to lend it to you anymore for nearly any reason they want.
Can they? I thought margin calls were you personal debt. It's like the bank deciding to sell your house that you have mortgage on because they think the market is too volatile. Makes little senes.
> One of the most important things to understand about margin calls is that your brokerage firm has discretion as to when you are required to increase the equity in your margin account. Some firms will attempt to contact you to tell you additional equity is required, but they're not obligated to do so. Whether or not your firm has contacted you, they can take immediate action to increase the equity in your account if they decide the equity is too low and is not in line with the risk of your account. This means they can immediately sell out whichever securities they choose, regardless of the financial and tax obligations for you.
It's in the logs, go see for yourself?
GME purchases blocked this morning on apps where Citadel is the clearing house.
SOMEONE proceeds to ladder short sell GME to cause a massive price dump.
Users are margin called from previously profitable positions (without being able to provide buying pressure needed to fight against a ladder short sell)
Shorts are able to unethically cover your position.
Read into this... it's all over the news and verifiable with documentation from various regulatory agencies.
No, you are making bold claims providing no evidence whatsoever. I can also just start spewing unfounded opinions that the illuminati are trying to defraud r/WSB. Everyone can do that.
You are going around parroting the same stuff everywhere and making zero effort to at least provide links to credible sources to support your claim.
I'm not saying you are wrong, I'm saying that if you want people to take you seriously (as opposed to looking like a shill), you have to do more than spam every possible discussion.
Hey, I'm afraid you broke the site guidelines badly and repeatedly. We ban accounts that do that, regardless of how wrong other commenters are or you feel they are.
This is ONLY if you enable margin trading via Robinhood Gold - they increased their margin requirements recently on GME and this will not happen to you if you are trading on cash.
All accounts are "Robinhood Instant" by default. You need to permanently opt-out of Robinhood Instant (or wait for deposits/trades to settle) to opt-out.
Yes, but "Robinhood Instant" is limited to a subset of the funds you are depositing. It is set up as a margin account to allow them to trade on your behalf before the money hits your Robinhood account. But the money will be hitting, so you will have cash to cover the trade. It's not the same as actual margin trading (where, for example, in this case, the user did not have cash to cover and so his position was liquidated by the broker.)
Some people have speculated (big sign reading SPECULATION SPECULATION NO PROOF above this post) it might make sense if RH was trading for itself and taking the other side of its client's trades, like Goldman was accused of doing in '08. In which case they are in big hot water.
ed. yes, on the chance that this wasn't just a margin call
Nothing worth worrying about. Every single case in the financial sector over the past two decades has resulted in fines that are a fraction of the profits. I mean, you had banks laundering money for cartels, Malasians were looted, etc etc... every single time they fine the culprits a tiny fraction of their profits.
The US has made criminal activity profitable, even if you get caught.
So Citadel and RH probably just made the smart move. Screw the rules, because the punishment for breaking them will be more than worth it.
FWIW, I think there are no conspiracies here on the side of Robinhood, and the attacks by the revolutionary mob are misguided.
Having said that, there is no question that banks ruined the economy during the GFC, and didn't pay enough of a price, and hedge fund managers often make a killing, while paying very little in taxes, and HFT make a killing without providing any social value.
But the answer to that is not, I'm afraid, hyping some gaming stock and trying to squeeze a few shorts.
The answer is political action - voting, pushing for proper regulation. There are lots of proposals out there: stringent capital requirements for banks; closing the "carried interest" loophole; changing the structure of markets (eg auctions every minute instead of continuous markets).
13G recently filed shows larger holders liquidating -- couple that to the crap financials in GME, then you can see the writing on the wall. However, insiders will be roasted by the DOJ.
Liquidate, restructure, hose commons.
It's GME -- it's a dead company trapped in yesteryear.
Sounds like a margin call [0] which is absolutely “business as usual” and not something to be upset over.
Some of the margin calls may have been triggered earlier than investors may have anticipated given that (I believe) Robinhood recently adjusted their margin requirements for GME. (It’s also normal for brokers to raise margin requirements on particularly risky stocks, which GME clearly is at the moment)
This story has so many twists. I just bought some today to raise the middle finger after I noticed politicians batting for the hedge funds.
I was confident I would lose it all, but now I am actually thinking this will go to court and I could make some money.
The only not silly response to that silly situation would be to GME to quickly sell enough stock to stabilize the price at some reasonably high valuation and them maybe use money from that to do some stock buybacks later if it falls to an unreasonable low level.
This is blatant anti-competitive behavior on the part of Robinhood and Citadel.
As i say elsewhere - this margin call was FORCED by RH because they blocked users ability to buy shares as Citadel + others were ladder short selling to artificially lower the stock price of GME, forcing the margin call.
This is horrific, criminal, and should be prosecuted.
Ultimately, they know that their SEC Fine will be less than the $50B+ in losses they face from their irresponsible naked short selling.
Did we learn nothing in 2008? Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world?
Something else we learned from 2008 is that the government and taxpayers made money on the bailout because it was paid back with interest, see sources like: https://projects.propublica.org/bailout/
> Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world?
Well yeah. Why would you expect anything else? And if anyone complains about it, the complaints will get scrubbed off the internet. And if you go to private messengers to complain, your session keys will get escrowed because "terrorism" or "misinformation" or something and you'll be banned. Keep in mind that the WallStreetBets Discord server was banned for "hate speech" right in the middle of all the recent drama. Does anyone actually believe that was the real reason?
It's because of shenanigans like this that I'm categorically against any sort of control whatsoever over flows of information.
It won't be long before the Biden Administration is declaring members from WallStreetBets to be domestic terrorists acting in concert to attack the US financial system (it'll be part of the broader War on Domestic Terrorism program that they've begun). The powers that be in DC and on Wall Street will never allow this kind of action to go unchecked indefinitely.
They'll probably make it a crime to organize large groups of individuals to herd buy/short a stock.
A stock market is a high stakes gambling system. The smart and the powerful win. You'll never limit winners to just the smart. If you someone did for a period of time, those smart people would become powerful and decide to limit other smart people.
But so what if you did allow just smart people win? Most people aren't that smart and you'd wind-up with a fleecing. So making this game fair isn't particularly in the average not-genius-with-nerves-of-steel person's interests. It's more in the average person's interests to have an index-traded-funds go up a reliable amount each year.
Fleecing Reddit geeks isn't fleecing everyone in America.
Edit: My point is - sure it might be against the rules but this affair is between smart speculators and big speculators. Saying it's crime against everyone is ridiculous.
"It's more in the average person's interests to have an index-traded-funds go up a reliable amount each year."
You are saying that people are too dumb to decide what to do with their own money, and that's not your call.
The reason this is a crime against everyone is because there's allegedly a "free market", but moments like this show that the emperor has no clothes and that in fact that's not the case.
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[ 5.5 ms ] story [ 92.4 ms ] threadIt’s really kind of ironic. People are knee-jerk blaming RH for closing margin positions because they didn’t fully understand how they work and the risks involved. Simultaneously, the same people are blaming RH for stepping in the way of what very certainly would have turned into a bad trade for a lot of people.
I don’t take RH’s side but it’s hard to see a winning play for them, it’s damned-if-you-do-damned-if-you-don’t.
No, RH is saving their own asses from the poor financial decisions of their clients. They don't want to be on the hook when those accounts crater along with GME.
If this is true, RH and other platforms pulling smiliar stunts should be sued out of existence.
Take it up with the SEC. Oh, wait, the SEC is at least partially responsible for such rules being in place. It's a conspiracy, I tell ya!
People that think they'll get rich off pocket-change investments, are not in a position to understand trading on margin, nor it's risks.
This morning Robinhood conspired with Citadel to halt trading amid a short ladder sell to drive the price lower, allowing shorts to cover their losses with no competition.
This is blatant market manipulation and anti competitive behavior, and must be stopped.
Why does everyone insist on protecting billionaires who insist on playing the game with a different set of rules than the rest of us?
Do you have evidence that happened, or are you arguing from pure cui bono circumstantiality?
GME purchases blocked this morning on apps where Citadel is the clearing house.
SOMEONE proceeds to ladder short sell GME to cause a massive price dump.
Users are margin called from previously profitable positions (without being able to provide buying pressure needed to fight against a ladder short sell)
Shorts are able to unethically cover your position.
Read into this... it's all over the news and verifiable with documentation from various regulatory agencies.
And because spamming the same comment across the thread is... spammy.
However, they should have inserted some notice in the UI that this was a result of a margin call that couldn't be met, given the level of knowledge of many of their users.
In contrast, once you're on margin you give them the right to liquidate any part of your portfolio, at any time, to cover your margin balance.
What they can't do is liquidate beyond the margin balance. Once they've covered the balance they would have to stop closing out your positions.
What in the world??
"In order to protect you from yourself, we have taken away your free will. Thanks!"
I thought RH was forcibly selling a customer's stocks that the customer had previously purchased with their own money.
Thanks for the clarification!
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.
I'd treat anything like this with a huge pinch of salt.
I'm following the discussions a bit, lots of comments by people spreading conspiracy theories, comments asking for evidence are just downvoted, or met by the conspiracy theorist's favorite, "do your research", comments spreading disinformation like "citadel owns robinhood" with a tweet as the only source, people who have no idea how market functions talking about "naked shorting", etc. The disinformation spreads faster than it takes to rebut it.
Yes, this is definitely one of the cookie-cutter responses. Dubious claims of "so many sources" but they are just super busy and can't be bothered to link to a single one.
It's not like a journalist right now can tell Robinhood "give us all your internal emails so we can verify the reason you've stopped trading these stocks". Or "Hey Discord, let's look at your internal slack comms so we can figure out what evidence you had to conclude that the WSB chat rooms were filled with hatespeech." Or "give us a data-dump of all the users and comments you identified as hatespeech".
How about some regulation in that regard? Hey EU? Here's an idea for a possible scenario and how it could look:
1. Public company makes contentious claims.
2. Curious individual (maybe journalist) makes formal request for data to confirm.
3. By law, company above is obligated to provide access.
4. Individual gets given a secure-room, no-data-copying-allowed physical access to inspect and analyze said data.
5. Individual is allowed to report on said data.
Edit. Formatting.
Consider:
* Most conspiracy theories are false.
* Many conspiracies do exist. I've seen people involved in a few.
In conspiracies, people keep secrets. Ergo, there's a poor mapping between actual conspiracies and conspiracy theories. People are speculating with no evidence. On the other hand, the conspiracies I've seen, you haven't heard of, and you probably won't.
The CIA is quite literally the US government covert agency set up to meddle in foreign affairs. It's raison d'être is to:
1. Collect covert intelligence for the US
2. Undermine enemies of the US / support friends of the US
A vague statement like "The CIA is involved in conspiracies" or even slightly less vague "The CIA lies and sometimes vilifies people" are almost vacuously true. That's literally what a covert government agency is designed to do.
A conspiracy theory is much more specific. "The CIA assassinated [leader] on [date] by [some action that looked like an accident] in order to [favorable outcome]." Most of those, with blanks filled in, are paranoid nonsense. If the CIA is doing it's job, I'll never find out about whom it assassinated or why. On the other hand, a blanket statement like "The CIA sometimes engages in assassinations" is obviously true. We have plenty of records from times the CIA slipped up.
As far as associating people with crazy by associating conspiracy theories with them, we're not even at the level of CIA. We're at the level of municipal politics, divorce cases, executive battles, and corporate PR smear campaigns.
If the CIA isn't involved in conspiracies, where are my tax dollars going?
Calling this a conspiracy theory is...inaccurate in my opinion.
Market manipulation is happening but mostly cuz Robinhood doesn't do anything on their own they rely on other companies
So yes. It's literally a conspiracy theory.
If you think Kan is a conspiracy theorist making baseless accusations, we see the world very differently. Which is fine. Diversity of thought is always welcomed in my opinion. But I am curious how you can have that opinion. It seems so clear to me, so I'm a bit confused as to how someone can hold the oppsite view.
https://twitter.com/justinkan/status/1354853920762253315?s=2...
Yes, I do, multiple people in fact (which I refuse to name drop). That’s why I replied to you the way I did in my other sibling comment. Him tweeting it means somebody told him, and likely he trusts that person. Billionaires are humans like anyone else, they sometimes trust the wrong people. They can also fall victim to “hearing what they want to hear”. They also have a lot of folks who want to win favor with them and thus will intentionally or unintentionally take information out of context and oversell it as something it isn’t. The ultimate point is that thinking a billionaire won’t possibly be misled/deceived themselves and then share wrong info (Elon Musk has had this happen a few times as an example, but he’s far from alone), or won’t deceive others for their benefit (there’s a “household name” in the US that immediately comes to mind as an example, leave it to you to decide who I mean), just seems naive to me.
I was definitely assigning him some kind of value that he may or may not have based on his success. Thanks for pointing out this flaw in my train of thought.
Have a wonderful day!
Which is definitely reasonable, but my point was that doesn’t necessarily lead to the conclusion you assumed. Hope I’ve helped, but either way, have a wonderful day yourself!
It doesn't even make a lot of sense as the part of Citadel that executes trades cannot talk to the part of Citadel that takes short positions, and vice versa.
Probably because it’s the law that there’s barriers put in place, that’s why? Like some communication will inevitably happen, but there are compliance teams who’s job it is to ensure it’s at a minimum.
So rich people are never lied to by people they trust? I get it, you trust him, but thinking just because he “has a source” saying it doesn’t automatically makes it factually correct. Maybe it is, but appeals to authority and essentially calling anyone who disbelieves crazy doesn’t compute for me.
Thank you, I will be here all day.
Isn't everybody working from home? How do you overhear things?
https://twitter.com/dreamwisp/status/1354865709998723072
edit: My bad, it's "just" cancelling their orders, not selling anything on their behalf.
Also that user does not have a blue check.
In some sense this was basically inevitable. Robinhood allowed (perhaps even encouraged) a huge mass of clueless investors to flood into the market. As long as the going was good, nobody complained, but as soon as things go south, people have started to learn expensive lessons.
This is not the first time this has happened. Almost every single market stress for the past 20 years has caused grief to retail in some way as they were caught out on something they didn't know about.
One clear example that comes to mind is when the Swiss national bank has removed the currency peg and a whole bunch of FX retail has made the expensive discovery that stop limit orders are not guaranteed to execute...
They're not investing in anything, their money doesn't contribute to any form of progress.
More details on margin calls here:
https://www.thebalance.com/what-is-margin-call-358106
RH is getting sued for market manipulation. This is the inevitable result from that. RH may very well be guilty in all of this, but not for these margin calls.
And it was impossible on RH and other brokers to buy more shares, selling (liquidating a long position) was always possible, AFAIK.
It's about time we talk about how it's not in the public's interest to allow companies to put arbitrarily user-hostile terms in their user agreements.
Remember:
This morning Robinhood conspired with Citadel to halt trading amid a short ladder sell to drive the price lower, allowing shorts to cover their losses with no competition.
This is blatant market manipulation and anti competitive behavior, and must be stopped.
Why does everyone insist on protecting billionaires who insist on playing the game with a different set of rules than the rest of us?
You trade with robinhood's money, then they can decide not to lend it to you anymore for nearly any reason they want. ¯\_(ツ)_/¯
You have to admit, though - that is disingenuous. Those plays were profitable, no need to call them (unless there has been irresponsible behavior on the behalf of the broker)
The fact does remain, though, that the way the data is presenting itself seems to indicate that there was disingenuous behavior on the behalf of market makers and a number of hedge funds. To be seen, I guess.
Can they? I thought margin calls were you personal debt. It's like the bank deciding to sell your house that you have mortgage on because they think the market is too volatile. Makes little senes.
https://www.fidelity.com/learning-center/trading-investing/t...
SOMEONE proceeds to ladder short sell GME to cause a massive price dump.
Users are margin called from previously profitable positions (without being able to provide buying pressure needed to fight against a ladder short sell)
Shorts are able to unethically cover your position.
Read into this... it's all over the news and verifiable with documentation from various regulatory agencies.
You are going around parroting the same stuff everywhere and making zero effort to at least provide links to credible sources to support your claim.
I'm not saying you are wrong, I'm saying that if you want people to take you seriously (as opposed to looking like a shill), you have to do more than spam every possible discussion.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and sticking to the rules when posting here, we'd be grateful.
All accounts are "Robinhood Instant" by default. You need to permanently opt-out of Robinhood Instant (or wait for deposits/trades to settle) to opt-out.
Edit: to add a link. This info is fairly well buried: https://robinhood.com/us/en/support/articles/robinhood-accou...
And what repercussions would they face, surely they’ve flagged that risk and are doing it anyway.
Most users who don’t know anything about WSB probably
Idk who is still going to use RH but I know they exist.
Ultimately, they know that their SEC Fine will be less than the $50B+ in losses they face from their irresponsible naked short selling.
Did we learn nothing in 2008? Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world?
ed. yes, on the chance that this wasn't just a margin call
Nothing worth worrying about. Every single case in the financial sector over the past two decades has resulted in fines that are a fraction of the profits. I mean, you had banks laundering money for cartels, Malasians were looted, etc etc... every single time they fine the culprits a tiny fraction of their profits.
The US has made criminal activity profitable, even if you get caught.
So Citadel and RH probably just made the smart move. Screw the rules, because the punishment for breaking them will be more than worth it.
Pretty sad to see most of HN willfully ignoring this fact and jumping to the defense of Hedge Funds and the billionaire class.
Having said that, there is no question that banks ruined the economy during the GFC, and didn't pay enough of a price, and hedge fund managers often make a killing, while paying very little in taxes, and HFT make a killing without providing any social value.
But the answer to that is not, I'm afraid, hyping some gaming stock and trying to squeeze a few shorts.
The answer is political action - voting, pushing for proper regulation. There are lots of proposals out there: stringent capital requirements for banks; closing the "carried interest" loophole; changing the structure of markets (eg auctions every minute instead of continuous markets).
Liquidate, restructure, hose commons.
It's GME -- it's a dead company trapped in yesteryear.
Some of the margin calls may have been triggered earlier than investors may have anticipated given that (I believe) Robinhood recently adjusted their margin requirements for GME. (It’s also normal for brokers to raise margin requirements on particularly risky stocks, which GME clearly is at the moment)
[0] https://www.investopedia.com/terms/m/margincall.asp
https://twitter.com/themaxburns/status/1354874931092348933
As i say elsewhere - this margin call was FORCED by RH because they blocked users ability to buy shares as Citadel + others were ladder short selling to artificially lower the stock price of GME, forcing the margin call.
This is horrific, criminal, and should be prosecuted.
Ultimately, they know that their SEC Fine will be less than the $50B+ in losses they face from their irresponsible naked short selling.
Did we learn nothing in 2008? Are we just going to continue to allow wall street to get away with fleecing everyone else in America / the world?
Yep, that we are going to have to pay their losses.
Well yeah. Why would you expect anything else? And if anyone complains about it, the complaints will get scrubbed off the internet. And if you go to private messengers to complain, your session keys will get escrowed because "terrorism" or "misinformation" or something and you'll be banned. Keep in mind that the WallStreetBets Discord server was banned for "hate speech" right in the middle of all the recent drama. Does anyone actually believe that was the real reason?
It's because of shenanigans like this that I'm categorically against any sort of control whatsoever over flows of information.
They'll probably make it a crime to organize large groups of individuals to herd buy/short a stock.
You'd better believe that something will be done to ensure that the rabble can't insult their betters like this ever again.
But so what if you did allow just smart people win? Most people aren't that smart and you'd wind-up with a fleecing. So making this game fair isn't particularly in the average not-genius-with-nerves-of-steel person's interests. It's more in the average person's interests to have an index-traded-funds go up a reliable amount each year.
Fleecing Reddit geeks isn't fleecing everyone in America.
Edit: My point is - sure it might be against the rules but this affair is between smart speculators and big speculators. Saying it's crime against everyone is ridiculous.
"It's more in the average person's interests to have an index-traded-funds go up a reliable amount each year."
You are saying that people are too dumb to decide what to do with their own money, and that's not your call.
The reason this is a crime against everyone is because there's allegedly a "free market", but moments like this show that the emperor has no clothes and that in fact that's not the case.