Re:Class Action Lawsuit Filed Against Robinhood
by this_user on Thursday January 28, 2021 @05:49PM
(#25950652)
Anyone who has a bit of experience trading the markets saw this (or something like this) coming for days. Just because these people don't know the first thing about market regulation doesn't mean they have a case.
What they did was effectively form a public stock pool for the purpose of disrupting the orderly function of the market, and drive up the price beyond all reason. This kind of thing used to happen regularly a century ago until regulation was enacted in order to stem that kind of abuse. If the SEC weren't in what appears to be a coma, they should have enforced those rules days ago by completely halting trading in the stock. But it seems that falls on private companies now for some reason.
Re:Class Action Lawsuit Filed Against Robinhood
by imtringued on Thursday January 28, 2021 @06:05PM
(#25950823)
What prevented short sellers from closing their position 10 days ago? Why are they still short selling to this day?
There isn't, but I think one can make the case that there should be. At the very least, communication from Robinhood, from the exchanges and from regulators was piss poor. As a result, we have half the internet wrapped up in some Ken Griffin as Gordon Gecko Batman conspiracy theory.
Robinhood was criticized for marketing day trading to people who, to a large degree, didn't know better. The counterargument was people knew what they were getting into and were free to do it. Fair enough.
This adds a new wrinkle. It wasn't ever a day trading platform! A day trading platform should be able to handle high volumes. It should be able to handle increased collateral requirements. It should be able to handle some market makers going offline. What Robinhood did is contractually allowed. But it flies in the face of what they held themselves out to be.
Robinhood sold a turd doughnut, folks said "it's fine, I want a turd doughnut," and then the turd turned out to be uranium.