I think it is ridiculous that Robinhood took the matters in their own hands to halt trading on GME. If anyone had to do this was the SEC. It is just outrageous.
I’m honestly very confused why people keep trying to draw a parallel between Parler and Robinhood. Beyond “big companies can do whatever they want” there really isn’t much in the way of comparison. And big companies doing what they want is something we’ve known about since around the time big companies first started to exist.
The comparison is not between Parler and Robinbood, it's a comparison between companies that canceled Parler and Robinhood: Sweeping, unilateral, unaccountable power of institutions we had not appreciated the power of previously.
I’ll agree that there are similarities between Parler and WSB Discord issue (how much hate speech is tolerated on your platform is a decision made by your service provider, not you) but the WSB Robinhood issue is something else altogether.
The Parler ban was a response from service providers so that they are not blamed for what their users (Parler) do (controversial opinion).
The GME/etc ban is a response from Robinhood so that they are not blamed for what theirs users (retail inverstors) do (controversial trading activities/losing money).
Serious question: Since RobinHood is a private company, does the "if you don't like it, you can build your own platform" argument apply here? Or does that only apply selectively when it benefits partisan politics?
This is the natural evolution when censorship as we've recently seen is given a pass.
No it doesn't apply. If you are dining in a restaurant and it starts putting cocaine into your coffee, that's still very illegal, regardless of whether you can choose another restaurant.
One sided halting in a moment like this reeks of market manipulation, which is illegal.
Holy shit, I can't believe people are comparing RH to Twitter, retail investment and corrupt hedge funds to people inciting violence against election results.
FWIW, this is an app in a supposedly regulated sector, making the call to affect stock prices and cut retail investors out of the market and causing a stock to tank.
I'm not comparing RH to Twitter, I'm comparing a private business' decision to a private business' decision, per your logic on the Twitter situation (banning any loud right-wing person). Time will tell if RH actually did anything illegal. If they didn't, then your previous Twitter logic should hold....i.e. "they're a private business and they can do whatever they want"....right?
I think what's ACTUALLY going on (whether your cognitive dissonance will allow you to perceive this comment or not), is that since this doesn't cut across political lines, you want to treat the situation differently.
Your comment doesn't get as much respect from me, because you think every loud right wing person is being censored on twitter, which is objectively, verifiably, bullshit. You are wrong. Incorrect. Lying? I don't know if you believe what you say or not.
Calls to violence from people in power are different from market manipulation.
I mean, doing something that will have a significant effect on markets is manipulation, which is regulated by the sec. It does apply, but it won't change. The only way to prevent this is removing the intermediaries, which events like this are pushing people towards.
I believe this is different because the SEC is involved, and if the SEC involved decides to rule that a broker cannot limit what stocks can be bought or sold because that would break the legal definition of what a brokerage is.
Does anyone know the law well enough to know if this is indeed a violation of any statutes?
That's just it though, Robin hood didn't delist gamestop. They just decided arbitrarily that their users are only allowed to sell it. Coincidentally, this is a move that highly benefits a major partner of theirs.
That connection is like 3 degrees of separation at best, though. Robinhood sells order flow to a number of market makers, one of which is Citadel Securities [1]. Citadel Securities is part of the Citadel group, which consists of a hedge fund (Citadel LLC) and a market making firm (Citadel Securities LLC) [2]. While both companies are owned by Ken Griffin and share many resources, they are split by a "Chinese Wall" [3] to prevent any conflict of interest between both sides of the firm. They also have different CEOs, management, employees, infrastructure, etc. as a result of this. Now, Citadel (the hedge fund) has invested $2 billion into Melvin Capital, which is one of the firms central to the whole issue [4]. Yet Melvin Capital has already closed its position in GME [5], which means that they no longer have a vested interest in the performance of GME.
There are several glaring problems with the theory that Citadel is pushing for Robinhood to ban buying GME for financial motives:
1. Robinhood has NO relationship with Citadel LLC
2. Everybody knows about the theoretical conflict of interest between Citadel/Citadel Securities so it is incredibly unlikely that Citadel Securities would risk doing anything to help Citadel in such a high profile scenario (i.e. the SEC/FINRA would be able to find out this kind of thing very quickly and very easily)
3. Citadel has no financial motive to stop trading of GME, because Melvin Capital has no financial motive to stop trading of GME
4. If it was as simple as trying to profit off of GME going down, why would they bother halting trades on other securities (AMC, BB, NOK, BBBY, etc.)?
This article does a really good job at explaining the situation (much better than I can do) [6]
Since the claim that they closed their position in itself would potentially influence the market to their benefit, I don't see a reason to trust their statement.
Either way, it would be illegal to say that they closed their position for the sake of influencing the market. The SEC really doesn't play around with that type of thing in such a high profile case
Because they risk running of being short squeezed in those stocks as well? Last time I check, big money isn't exactly throwing itself at airlines, mobile areas other than Android or iOS, and cinemas, even though two of those are bound to pick up later this year once covid is over and Black Berry is in talks with Baidu, which you can't ignore.
The big guys know all this, only they were hoping to short, make a profit, and then reinvest down the road when things picked back up, making even more money. WSB just capitalized on their strategy and now that they are losing, they are throwing a fit.
Robinhood can do whatever it wants and people can in response give it a 1 star rating. They can also complain about it not being a good platform to use. Freedom goes both ways.
You can also complain about Twitter or give its app a low rating or just stop using it.
This is a bit of a dense question - but being shut out of trading a stock doesn't physically threaten someones life. So not exactly analogous to the twitter situation you are clearly alluding to.
The reason why this happened is that their clearing house stopped fulfilling their orders (totally out of their control,) but Robinhood bungled this so badly, I honestly wonder if they'll ever recover. WeBull had to do the same thing but they have a clear reason rather than "protecting investors" etc.
I do agree Citadel, which I believe helped out one of the hedge funds in trouble form the short squeeze, being the clearing house is a "moral hazard" and a conflict of interest.
Robinhood phrased their message as if it was for user's own good. Moralizing everything beyond protocol and rules and law has serious consequences. It does nothing but driving people cynical. Didn't the elites learn the stories of USSR political jokes, the stories of how East Germans (and ancient Chinese people) talked to each other via eye contacts only? It's not hard to guess what will happen when enough number of people stop trusting the system. For that matter, I'm so glad that AOC and Td Cruz can agree with each other to probe Robinhood's practice.
I don't know if there's any communication protocol with eye contact. People were so afraid of persecution that they used only eye contact to exchange feelings, or so I read. One may argue that it's different this time aforementioned persecution came from the governments. Well, it's worth remembering that it was ordinary people who voluntarily snitched each other during those horrible times, believing that they were on moral high ground. Or just ask Chinese: who beat professors and school principals to death? Who thought that business owners deserved to starve to death? Who thought eating flesh of person was righteous because that person was born in a middle-class family?
It looks many Chinese have learned their lessons from their own painful history, yet Americans didn't even care about history at all.
That sound you hear is the evaporation of billions in pre-IPO Robinhood equity vanishing based on both a poor decision (to disallow buying of a stock that others could still buy) and worse, poor execution on their site that didn't make it clear how narrow the blocking was.
Those customers who have left Robinhood will never come back and it will take years to recover, if ever.
Steam (video game store) has separate "reviews" and "recent reviews" summaries, so you will see something like "reviews: mostly positive, recent reviews: overwhelmingly negative". It is often informative, as updates can make a good game unplayable, riddle it with microtransaction, or servers can go offline.
It also really helps in the opposite direction. Games that had release issues but fixed most of them have mediocre overall reviews but positive recent reviews, and I've found that's a pretty good sign that a game is worth trying. Without that separation, it would be much harder for the game to get over its rocky launch.
If Amazon did this, then it would solve the problem of grandfathered reviews from years ago being used to promote completely different inferior products. It would have saved me hundreds of dollars worth of returns.
But Amazon has no incentive to do so, because they would sell less items. Maybe with Steam the target market of gamers can direct so much more backlash towards something that doesn't work than the general audience of Amazon.
If a dev releases an update that breaks the app or fundamentally alters the behavior of the app, why should users not be allowed to offer an updated rating based on those changes. If ratings are due to some recent change, then of course it will naturally look like a swarm. Nothing nefarious about it. Any kind of artificial disruption of the users being allowed to post their review is artificially protecting the dev.
That (and the related sibling's comments) is a fair argument, but admittedly not what thought when I first pictured the term "mobbing".
For anyone actually affected by Robinhood, I think leaving 1-star rating it is absolutely just.
However, mobbing, to me, is when the random internet gets out its pitchforks and finds something to dogpile on, even though they might not have been affected personally.
> For anyone actually affected by Robinhood, I think leaving 1-star rating it is absolutely just.
Given the claims that (various high percentages above 50%) of RH users had one of these meme stocks, that should still drive the rating to 1-star.
Especially if you also count everyone as "affected" who bought through another broker and who saw those shares plummet once RH destroyed retail "investor" (read: gambler) demand.
>even though they might not have been affected personally
It's unrealistic to imply that people shouldn't share opinions of behavior if they weren't directly and personally affected by that behavior. You're also making a large assumption that cases you would define as "mobbing" consist of a significant portion of people unaffected.
> It's unrealistic to imply that people shouldn't share opinions of behavior if they weren't directly and personally affected by that behavior.
The thing about opinions nowadays is that they are manipulated right and left. It has become absolutely trivial to whip up a mob into a frenzy.
This isn't to say that any concerted movement against something one was not personally affected by is illegitimate. Clearly, one does not need to be a person of color to support BLM.
My question regarding the mobbing prevention was in the spirit of the first form.
In certain cases, it's deserved and appropriate. If an app is scammy and the majority of its users believes it's a bad app, it should have its rating dropped.
It's strange that you're ignoring the fact that if an app does something bad that affects many users, those many users will, reasonably, review the app poorly. You're implying that all sudden influxes of bad reviews are somehow illegitimate, which is a confusing position.
It provides a more timely signal about an app's rating.
In its absence, you'd have the Amazon effect -- accumulate five star volume, tank / exploit the product, coast as your average is very slowly dragged down.
I don't know if that's a positive, but companies like Google often cave to the mob and the press demanding deplatforming of certain individuals. If they remove the ratings then that will just prove, once again, what their allegiances are. Except now a lot of people are watching really closely.
I don't have a problem with this specific case, I'm thinking of, for example, users of 2 different apps having a war with each other and going in and leaving negative reviews for the other app.
Steam (the video game distribution platform) does "recent reviews" and "all reviews" so that you can tell if there has been a recent influx of positive or negative reviews.
Most of the other brokerages (Schwab, Etrade, and TD Ameritrade, but NOT Fidelity and Vanguard according to the reports I am getting) are participating. According to the rumor on Reddit https://www.reddit.com/r/ClassActionRobinHood/comments/l723k... the call came from the White House.
I wouldn’t give that rumour any serious thought considering there’s literally nothing backing it up and it mostly just feeds what people already want to believe.
People are pointing out in the comments that some of the details don’t line up, like him being based in the wrong city and him overhearing conversations while WFH.
For real, despite three years of QAnon people are still failing miserably to apply any incredulity about whatever they read on the internet. That it affirms their beliefs is all that matters, never mind its veracity.
The crazy rumors aside, at least this whole mess has clarified for me which brokerages to give my business to and which ones to boycott. It is the free market afterall, and people will be choosing with their $$$ which ones to support and which ones to boycott. The 1 star rating, while a bit extreme, also is part of the same idea.
You also kinda had it coming when you called yourself "robin hood" and then immediately bent over the moment the slightest challenge appeared.
In the words of Joe Biden, that rumor is pure malarky. I saw Vladimir on CNBC this morning in what looked to be his home. Unless the "low-level computer science" person was in the founders home, it seems very unlikely he "overheard" a convo with the White House. It seems like a dog whistle to me.
Can someone who knows more about such things than I explain to me why their weird response to the situation (halting buying, but still permitting selling) was deemed by them to be the best of their options (the other two obvious ones being to temporarily stop dealing in those securities entirely (halting buying and selling), or to continue letting people trade them as they had the previous day)?
It's confusing to me. I'd think if they were being risk-averse or something they'd have stopped dealing in them entirely until the craziness passed. The "you can only sell, not buy" part seems... odd to me.
It is very likely that their "upstream" partners asserted this, and Robinhood didn't have much of a choice. Their biggest mistake is probably the god-awful communication with customers about this decision.
Another thing to note is that one of Robinhood's main investors from their last round, 'D1 Capital', is also down 20% this year [1] with a fund size of 20 billion, so that's a 4 billion dollar hole for them to recover from.
I've only seen mention of Citadel but the short squeeze on these stocks (blocked stocks) continuing could literally have made D1 Capital explode.
In the aftermath of this fiasco, perhaps Robinhood can get away with a small fine. Even a billion would be less than the collective sum all hedge funds involved could have lost had this upward price movement continued.
First, RH aren't the only ones blocking GME purchases.
Second, if popular trading platforms artificially block demand, it becomes a self fulfilling prophecy, and the stock is going to plunge by this action alone.
Given Citadel's involvement, this is blatant market manipulation, and I hope people go to prison for this. Ftr, I never traded individual stocks, so I'm not affected, but this is still bullshit.
You mean people who bought a hot potato might be stuck owning it when the music stops? Make no mistake, the music will stop and someone will be left holding it. Might as well be the folks holding it right now.
In the simplest, likely potentially inaccurate explanation... Robinhood doesn't actually make the trades. They pay someone else to make the trades, add a small amount to the price, and that's how they get to 0$ trading price to the end user. The upstream party is refusing to do things, so Robinhood has no choice but to follow the rules that party set.
That's like, way over simplified but gets to the gist
When your marketing model is built entirely on sticking it to the man, how do you communicate that the man has you by the balls and you have no recourse because your business model is built on the man paying you off.
You do this clearly, because if you don't give people a good explanation, they'll find one elsewhere. And the person giving that explanation probably doesn't care about preserving your reputation.
My understanding is that Robinhood didn't actually block these purchases but rather the service they use to buy/sell stocks blocked it called Citadel
So it's not Robinhood, persay, but rather Citadel.
Why did Citadel block purchasing of GME stock? Because Citadel just invested 2 billion dollars in Melvin Capital Management; one of the hedge funds that has a lot to lose as long as the GME stocks keep going up.
That's the rumor but there's no evidence to back it up. Melvin could've closed their GME positions days ago, in which case Citadel wouldn't be on the hook for any further price changes.
I think this is possible, but do we know for a fact this is the case? Melvin claims they already got out of the GME trade. They could be lying, but they would open themselves to a lawsuit from investors if they were.
I'm not sure if Citadel can just refuse to purchase GME (RH could just go elsewhere), but maybe they said they wouldn't pay RH anymore for order flow unless they blocked it. But do we know that Citadel did this? I've only heard speculation to that effect.
RH could not just go elsewhere; moreover, they absolutely could not go elsewhere today. Handling order flow for automated transactions isn't something you can find on short notice.
citadel only handles like 10% of their order flow. the rest is other companies. including Apex clearing which also handles it for Webull and other platforms that halted trading
I really don't think you'll get a good answer from anyone for a couple of days at least. This is quite unprecedented (not them halting buying of a certain stock, but the whole situation with its underlying context).
Yeah, I keep seeing this claim posted that Citadel owns Robinhood, but I can't find any evidence to back it up. The Wikipedia pages for each don't mention the other.
This is a jabberwocky sentence. It is syntactically correct but there is nothing in the real world to which it could be referring. Brokers do not "support" stocks.
It's not even that it rounds to 1 star, it's actually 1.0 stars (according to the aria-label on the HTML). The difference between a 1.4 and 1.0 is huge in terms of what percent of reviews are actually favorable.
I honestly feel bad for all the employees, especially the early ones with equity that were looking forward to cashing out after the IPO - now they have to deal with immensely negative PR and federal investigations.
For this reason I imagine that the first unconfirmed leak mentioned in another post will be far from the last. As if WSB vs. hedge funds wasn't a crazy enough story itself, the sequel to The Big Short is pretty much writing itself as the other players in the system expose exactly where they stand. Regulators and the Federal Government chapters incoming...
I fully agree that the tweet is not proof. I fear that nothing will come forward in any case. My point is: It could be true and we'd never see proof. That doesn't mean we should assume it to be true. Neither does lack of proof imply that it has to be untrue. In other words, we will probably never know for sure. But absence of evidence is not evidence of absence.
I smelled a rat in Robinhood back when they first showed up. When something goes from paid to free, the only appropriate response is to question how that happened, and what changes in motivation now exist.
I feel like this action from Robin Hood saved a lot of retail trader from self harm.
A lot of people are clinging to the hope that whatever came out of shorts covering their position being false. Whereas given the volume of the previous days it's highly likely they've already gone. Whoever goes in at this point is likely going to end up losing everything.
More importantly it saved hedge funds like Melvin and Citadel form self-harm. They aggressively shorted these stocks into the ground, looking to make billions. If the prices stay up or keep going up, they stand to lose billions and even go out of business.
If you look at r/wallstreetbets, only a few people seem to have invested more than a couple of tens of thousands. The guy who came up with this idea to profit off of short squeeze seems to have invested only 53k. Most other people invested a few hundred or a few thousand. Also, people on r/wallstreetbets routinely show screenshots of their losses. It's kind of preposterous to move forward assuming these people don't know what they're doing, and Robinhood saved them...
These trading platforms are blatantly intervening to save the hedge funds, not the Reddit traders. Government may have a say in it, too, because they want market stability. And if these hedge have to sell their long positions to cover shorts, it could put a big dent in the market and even cause a larger scale crash.
how would that cause a crash? Retail (and less shady institutions) will buy more aapl when it dips and all that's happened at the end of the day is a big transfer of wealth from institutions to retail (and less shady institutions).
To cover their short position at a huge loss, funds would have to sell their long positions, which is basically a big sell-off. That may be just temporary. But in a deep bubble it could trigger a mass selloff and a recession.
Bowing to the whims of established trading firms to protect said firms being squeezed by a crazy army of day traders is a great way to ruin the rep your “Robinhood” trading app stands for. Score one for the little guy.
I’m hoping RobinHood gets sued out of existence and many of these hedge funds burn. The industry’s response to this is stupid and classist: “we can’t have randos making money...” as irrational as the system is it is working as is.
I wonder what percentage of Robinhood users hold GME - if it's more than 25% I'd say they're finished. If we assume 25% of users hold GME and 80% of GME holders will not return after this fiasco that's extremely significant IMO.
Not to say that they'll cease to exist, but I doubt they'll remain the "#1 trading platform."
Although they've left the tweet up, the article it links to says that this is incorrect: "Correction: An earlier version of this article stated that 56 percent of Robinhood users hold GME stock. This is incorrect, based on a misreading of a statistic on Robinhood. Motherboard regrets the error."
I can say with 99% certainty that they aren't just counting invidual $GME holders, but every one of Robinhood users that holds an ETF (like total US Market) that contains $GME...
So this is really such a bad faith statement from Motherboard, because all of the ETF holders (probably 90% of the "half") can still sell their ETF's and thus their indirect $GME shares...
I think GME is one of the freebie stocks that Robinhood gives out as a referral bonus, so many of those users might just have had one stock incidentally.
From what I understand Robinhood's actions today only impacted derivatives of GME, not trades involving the actual underlying equity (which, I imagine, is what most people actually own).
This is interesting in that it provokes the question of what an app's rating "means". Clearly, if you were getting the app because you expected to be able to trade GME and you can't, then this is a good signal not to get the app. But not all "protest votes" of this sort may be equally good signals.
I would argue most of the 1 star reviews are users like myself feeling betrayed who are speaking with their dollar, share, and review votes by leaving the app entirely.
I had already transferred all my stocks from Robinhood to my company provided Fidelity account sometime back after reading about their shady practices last year:
It can also take a while for a rating to go through. Once you tap the allotted stars you'd like to rate an app, you need to wait until you see the "Your feedback was submitted" modal to appear.
Opinion: With such wild swings in emotion in the markets right now in general, you can't expect investment app ratings to be even remotely objective.
IMO Apple is making proactive moves to protect their store's rating system reputation, such as it is.
I've used RobinHood since 2016 (not my only brokerage) and the app continues to be fine. It's not a race car, it's more like a family sedan. The company has been reasonably good at messaging and a number of other brokerages also halted buying of $gme, $nok, etc.
So not only is RobinHood not getting a fair shake (we haven't even heard their side of things), but other brokerages are getting _way_ more than what's fair for them given that they did the exact same thing.
I know, crazy point I'm sure, but even if you have a bad reputation, you should work to keep it from getting worse.
RH app reviews right now are going to be way too emotional, and they'll stay there no matter what RH does in the coming days. This will take Apple's reputation down a notch on both ends--app developer and app reviewer.
Scanning the complaint quickly... it's not a strong case. The problem plaintiffs have is that the contract they signed lets Robinhood essentially refuse to trade if it wants to. In order to defeat that, you're going to have to argue that those contract provisions violate federal law and are therefore unenforceable. That's not really want the complaint does. Instead, it seems to argue that Robinhood's error was in failing to allow trades in GME in the first place, not in the reasoning for its failings. (At least they actually allege enough of this to potentially get discovery, which is better than some other complaints I've seen recently).
It won't. Everyone who has an account at RH has contractually agreed not to bring or participate in a class action suit and has contractually agreed to arbitration.
Not only they cheated their own users, they also artificially manipulated the market and that eventually defrauded users of other brokers who legitimately expected a buy pressure coming from Robinhood users.
So, 1-star is even too much, jail time would be preferred.
I don't know what the next step is, but the fact that pretty much everyone knows that there will be no jail time despite them openly committing crimes to defraud so many people isn't going to lead us somewhere good.
There should be zero stars available for scamsters. Seriously this should be an option. Why should anyone give one star to a scamming firm Robbing Hood which has colluded with their backer Citadel. They have derogatory term for Retail Investors - Dumb Money. Now the 'Dumb Money' has figured out the the hedge funds'rigged game.
Could you please review the site guidelines and stick to the rules when posting here? They include:
"Please don't fulminate."
That means please don't post comments in which indignation overwhelms information. That lowers signal/noise and escalates activation in others, which takes us away from curious conversation.
Visually, allowing 1 to 5 stars inflates the way ratings look, because the first star is always present, even for the worst products.
Imagine if it was pie chart or a bar chart: the lowest rating would look like 20%, not 0%.
Or imagine a product where 50% of people gave it the lowest rating (1 star) and the rest gave it the highest rating (5 stars). This would be presented as a 3/5 star item, which visually appears quite a bit better than its real rating (50%).
That's a consequence of the UI pattern - when you use the same widget as indicator and input, you need some way to represent "no vote yet" - plus, it would be hard to click/tap "no stars". It could be done better but alas, minimalism is the name of the game.
Youtube routinely scrubs views, likes, and dislikes from videos based on attempts to discern if they're fraudulent. You can't believe that this is evidence that Youtube is conspiring to support Biden unless you also believe that Youtube is conspiring to suppress BTS, the famous K-Pop boy band: https://www.quora.com/Why-did-YouTube-delete-views-from-BTS-...
I get that people are pissed, but this is exactly the same thing that the Qanon idiots were doing - going along with the wildest theories and calling anyone who questioned them complicit. By doing so, they destroyed their entire movement and the cause they were fighting for.
This reminds me of how casinos can kick people out for any reason or no reason at all. Treat meme stocks like a trip to the casino: don't wager more than you can lose.
Better to have 1 star and stay open than to be shutdown one way or another.
Music, taxis, retail, newspapers, politics and others have been disrupted by technology and the incumbents have suffered.
The establishment players have all seen this and they aren't going to let it happen again to them. They'll let technology in but only the way they want.
And now that deplatforming companies and powerful from credit-card, cloud providers, app stores, communications is normal and accepted they have more power and control than ever.
If I was robinhood I would do the same thing. Standing up for a principle is only going to get you shutdown and have everyone hate you after the fake news vilifies you and drags you through the gutter.
