Robinhood CEO, Reddit Co-Founder and Others Testify on GameStop Stock(c-span.org)
c-span.org
Robinhood CEO, Reddit Co-Founder and Others Testify on GameStop Stock
https://www.c-span.org/video/?508545-1/robinhood-ceo-reddit-founder-testify-gamestop-stock-part-1&playEvent
97 comments
Robinhood has clearly been flying by the seat of its pants this whole time and the CEO is in a weird position where its better to let people think you are evil than know you are incompetent.
I mean, I honestly don't really blame Robinhood's leadership here. This is incompetence, by virtue of having no solid precedent or guidance on what is the right thing to do here.
Gamestop's stock rise was unambiguous market manipulation. Sure, the difference between a single actor driving up a stock and a bunch of random people on the internet doing it is significant. But what isn't ambiguous is that GameStop stock wasn't worth nearly 400 dollars, and whatever was going on was fishy. Maybe this legal because of the decentralized nature of the manipulation, but this was likely unclear at the time. It still seems unclear to this day.
If Robinhood continued to allow trades then they could be accused of being complicit in market manipulation. This was probably unacceptable to them. If they banned buying and selling GME then they'd have shitloads if pissed customers who lost money because Robinhood didn't let them sell. So prohibiting buys but not sales seems like the least-bad action. Yes, it has the effect of downward pressure on the stock. But all of the alternatives were worse.
Gamestop's stock rise was unambiguous market manipulation. Sure, the difference between a single actor driving up a stock and a bunch of random people on the internet doing it is significant. But what isn't ambiguous is that GameStop stock wasn't worth nearly 400 dollars, and whatever was going on was fishy. Maybe this legal because of the decentralized nature of the manipulation, but this was likely unclear at the time. It still seems unclear to this day.
If Robinhood continued to allow trades then they could be accused of being complicit in market manipulation. This was probably unacceptable to them. If they banned buying and selling GME then they'd have shitloads if pissed customers who lost money because Robinhood didn't let them sell. So prohibiting buys but not sales seems like the least-bad action. Yes, it has the effect of downward pressure on the stock. But all of the alternatives were worse.
> what isn't ambiguous is that GameStop stock wasn't worth nearly 400 dollars
1 bitcoin is worth $50,000 and has less utility. Tesla stock is worth more than every other car company put together, yet I don't see half of global car sales being Tesla.
Are you suggesting that the government should not allow people to freely trade bits of paper between themselves based on your view of how valuable something is?
1 bitcoin is worth $50,000 and has less utility. Tesla stock is worth more than every other car company put together, yet I don't see half of global car sales being Tesla.
Are you suggesting that the government should not allow people to freely trade bits of paper between themselves based on your view of how valuable something is?
> 1 bitcoin is worth $50,000 and has less utility. Tesla stock is worth more than every other car company put together, yet I don't see half of global car sales being Tesla.
I think there's a distinct difference here. Bitcoin believers think that bitcoin is worth that and that it's so important. Tesla believers think that Tesla will take over the world, become the self-driving handle-every-transit-issue company, and become dominant in the power industry as well. I'll throw in that gold is of extremely limited utility (for jewelry and industrial purposes), but people think that's really valuable. Warren Buffet talked about how gold was worth as much as 16 ExxonMobiles plus all the crop land in the US plus a trillion dollars left over. Would you rather have a cube of gold that fits in a baseball infield (68 feet per side) or companies that make stuff. If you had $15T today, would you buy the FAANG + Microsoft and still have $7T burning a hole in your pocket or would you go for the shiny cube!
But people still believe gold has so much value.
That contrasts with GameStop where the dialogue was about forcing someone who had a short position to have to buy the shares to cover their position at a high price and drive the price up further. Most people who invest in gold aren't thinking, "I'm going to make money off the bigger idiot who comes after me". People who believe in Bitcoin aren't thinking they have to hoodwink a bigger idiot into buying them in the future - they're just so awesome! People who are Tesla bulls think Elon Musk is going to change the world and grab all the profits across several industries.
I'm not saying one way or the other that the government should regulate these trades, but there is a big difference. In one case, people genuinely believe in the things they're buying. In the other, they're trying to manipulate or take advantage of something in the system - in this case, that someone was short and could be squeezed if enough people/money went in on the squeeze.
I think there's a distinct difference here. Bitcoin believers think that bitcoin is worth that and that it's so important. Tesla believers think that Tesla will take over the world, become the self-driving handle-every-transit-issue company, and become dominant in the power industry as well. I'll throw in that gold is of extremely limited utility (for jewelry and industrial purposes), but people think that's really valuable. Warren Buffet talked about how gold was worth as much as 16 ExxonMobiles plus all the crop land in the US plus a trillion dollars left over. Would you rather have a cube of gold that fits in a baseball infield (68 feet per side) or companies that make stuff. If you had $15T today, would you buy the FAANG + Microsoft and still have $7T burning a hole in your pocket or would you go for the shiny cube!
But people still believe gold has so much value.
That contrasts with GameStop where the dialogue was about forcing someone who had a short position to have to buy the shares to cover their position at a high price and drive the price up further. Most people who invest in gold aren't thinking, "I'm going to make money off the bigger idiot who comes after me". People who believe in Bitcoin aren't thinking they have to hoodwink a bigger idiot into buying them in the future - they're just so awesome! People who are Tesla bulls think Elon Musk is going to change the world and grab all the profits across several industries.
I'm not saying one way or the other that the government should regulate these trades, but there is a big difference. In one case, people genuinely believe in the things they're buying. In the other, they're trying to manipulate or take advantage of something in the system - in this case, that someone was short and could be squeezed if enough people/money went in on the squeeze.
> forcing someone who had a short position to have to buy the shares to cover their position at a high price and drive the price up further.
why shouldn't that be allowed? If the person shorting has a demand for the share (to cover their position), they must pay for their demand. They knew this could happen going in, and assumed the risk.
why shouldn't that be allowed? If the person shorting has a demand for the share (to cover their position), they must pay for their demand. They knew this could happen going in, and assumed the risk.
>Most people who invest in gold aren't thinking, "I'm going to make money off the bigger idiot who comes after me".
Uh... this is literally how any investment works.
Uh... this is literally how any investment works.
No it is not, at all. Investments [are believed to] have intrinsic value that may be realized over time. I DO NOT need to sell an investment to make money on it. It is this belief in enduring value creation that gives an investment its present value, and certainly I can buy or sell the investment at any time based on this present value. Circumstances can change the relationship between the value creation and present value, and give me more opportunities to exit an investment profitably, if I want to.
But an investment is a belief in enduring value creation, not a belief in selling to a greater fool, or selling at all.
This is why (for the most part) gold, currencies and other 'stores of value' ARE NOT investments, in the proper sense.
But an investment is a belief in enduring value creation, not a belief in selling to a greater fool, or selling at all.
This is why (for the most part) gold, currencies and other 'stores of value' ARE NOT investments, in the proper sense.
>I DO NOT need to sell an investment to make money on it.
You literally cannot make money from an investment without selling it (sans dividends, rent, etc but thats not really what we are talking about)
In the case of BTC and TSLA, people are ONLY buying it because they expect it to go up, and then they will sell to someone "idiot"
You literally cannot make money from an investment without selling it (sans dividends, rent, etc but thats not really what we are talking about)
In the case of BTC and TSLA, people are ONLY buying it because they expect it to go up, and then they will sell to someone "idiot"
Why does it necessarily have to be an idiot? If you bought a home in 2000, and you sell it today for 4 times the cost to someone that wants to live in it, are they an idiot?
Bitcoin, and decentralized currencies in general, are a novel thing. They absolutely do have utility, especially when it comes to circumventing government asset transfer controls. Plus, there's a fixed amount of bitcoin that will ever be available. And we're already close to that limit, 80-90% there.
Tesla is a pioneer in the electric vehicles industry. It's in a particularly good position to profit from decarbonization movements.
Gamestop is neither of these things. It's a brick and mortar store that was being made obsolete by digital distribution, and even more so from coronavirus.
Should pump and dumps be legal? That's just reading bits of paper based on people's views of how valuable they are. But nobody serious doubts that pump and dumps schemes are justifiably banned. Yes people should mostly be free to buy and trade as they see fit. But some people are willing to act in bad faith to exploit others.
Was Gamestop's meteoric rise a pump and dump? In part it was a short squeeze, but it also had all the hallmarks of a pump and dump. We keep saying that it was a bunch of internet people getting rich off hedge funds. But the people who were actually getting screwed were the ones who bought in at $100+ a share and lost over half their money. Nobody was ever under any illusion that the stock would remotely stay this high, and people were just hoping to get lucky and sell right before the crash. This isn't the kind of behavior someone wants in the stock market.
Tesla is a pioneer in the electric vehicles industry. It's in a particularly good position to profit from decarbonization movements.
Gamestop is neither of these things. It's a brick and mortar store that was being made obsolete by digital distribution, and even more so from coronavirus.
Should pump and dumps be legal? That's just reading bits of paper based on people's views of how valuable they are. But nobody serious doubts that pump and dumps schemes are justifiably banned. Yes people should mostly be free to buy and trade as they see fit. But some people are willing to act in bad faith to exploit others.
Was Gamestop's meteoric rise a pump and dump? In part it was a short squeeze, but it also had all the hallmarks of a pump and dump. We keep saying that it was a bunch of internet people getting rich off hedge funds. But the people who were actually getting screwed were the ones who bought in at $100+ a share and lost over half their money. Nobody was ever under any illusion that the stock would remotely stay this high, and people were just hoping to get lucky and sell right before the crash. This isn't the kind of behavior someone wants in the stock market.
>But what isn't ambiguous is that GameStop stock wasn't worth nearly 400 dollars, and whatever was going on was fishy.
Having many people buy a stock after being encouraged also sounds like how the system has worked for decades. How many times has an analyst issued a 'strong buy' recommendation, and the stock then goes up.
Having many people buy a stock after being encouraged also sounds like how the system has worked for decades. How many times has an analyst issued a 'strong buy' recommendation, and the stock then goes up.
>If Robinhood continued to allow trades then they could be accused of being complicit in market manipulation.
They can be accused of anything but that doesn't mean it will hold up under any scrutiny. Brokers aren't obligated to make decisions on market manipulation -- that's the SEC's job, who does it quite poorly as we can see from this episode.
They can be accused of anything but that doesn't mean it will hold up under any scrutiny. Brokers aren't obligated to make decisions on market manipulation -- that's the SEC's job, who does it quite poorly as we can see from this episode.
Yep - surely a broker cant be a party to manipulation by simply offering their brokerage services!
Stopping the purchases of a share unilaterally, on the other hand, would look like manipulation.
Stopping the purchases of a share unilaterally, on the other hand, would look like manipulation.
I think there is an element of naivety ON Robinhood with how the clearing house (DTCC) could demand deposit money from RH. I feel like RH might have been bullied to shut down buys on those securities and the absence of the clearing house involved in this hearing is a huge miss.
RH could have done multiple things to avoid this: stopped sign-ups, delayed trades on all new accounts or simply exceeded required deposit ratios so that the clearing house couldn't demand things of them.
There were significant shorts that were essentially unfolding. Ryan Cohen became involved with GameStop and the potential for a new direction of the company possibly raised the price up to the $20-40 range. Over-shorts would have corrected themselves with the skyrocketing price that day and then GME would likely have returned to the $20-40 range it was in prior. That is just things playing out on the market, not manipulation.
Some of the research I've been doing over the past few weeks has revealed that for all retail trading, there are conflicts of interest from the retail broker all the way up the chain to the clearing house. Similar concept in social media where the user is the product. There is a former investment bank trader/portfolio manager that has some videos on this - caveat that he also sells classes now. Search for 'anton kreil retail trading' for some insights.
RH could have done multiple things to avoid this: stopped sign-ups, delayed trades on all new accounts or simply exceeded required deposit ratios so that the clearing house couldn't demand things of them.
There were significant shorts that were essentially unfolding. Ryan Cohen became involved with GameStop and the potential for a new direction of the company possibly raised the price up to the $20-40 range. Over-shorts would have corrected themselves with the skyrocketing price that day and then GME would likely have returned to the $20-40 range it was in prior. That is just things playing out on the market, not manipulation.
Some of the research I've been doing over the past few weeks has revealed that for all retail trading, there are conflicts of interest from the retail broker all the way up the chain to the clearing house. Similar concept in social media where the user is the product. There is a former investment bank trader/portfolio manager that has some videos on this - caveat that he also sells classes now. Search for 'anton kreil retail trading' for some insights.
New leadership prompting a 5-10x increase in valuation? Dubious. And Robinhood didn't shut down trading at $40. They shut it down in the $300-$400 range. To be frank, anyone that thought this price was driven by people who genuinely thought gamestop was worth that much is just willful ignorance.
There was no good option for Robinhood. Keep trading open? Be complicit in a pump and dump. A pump and dump that may be legal by virtue of the fact that it's decentralized, but it's still a pump and dump and Robinhood probably doesn't want to take it's chances. Ban both buy and sales, and people lose money because they can't sell their positions. This is worse. Doing what they did was the best option. Not a good option, and one that still left a lot of people unhappy. Sometimes the best option is still a bad option, it's just the least-bad option.
There was no good option for Robinhood. Keep trading open? Be complicit in a pump and dump. A pump and dump that may be legal by virtue of the fact that it's decentralized, but it's still a pump and dump and Robinhood probably doesn't want to take it's chances. Ban both buy and sales, and people lose money because they can't sell their positions. This is worse. Doing what they did was the best option. Not a good option, and one that still left a lot of people unhappy. Sometimes the best option is still a bad option, it's just the least-bad option.
A pump and dump is a scheme done on purpose with misleading or exaggerated statements to boost a price while holding a significant amount of shares and then sell the shares at some peak [0]. Wolf of Wall Street got caught with a pump and dump. This wasn't a pump and dump.
When a stock is shorted 140% of its outstanding shares it's simply a supply/demand math problem. Eventually those short positions come due via whoever owns them paying too much interest or a margin call and they have to buy actual shares. This demand for shares makes the stock go temporarily up when there aren't enough shares to go around. This happened with VW in 2008 and they temporarily became the most valued company on the planet via a short squeeze [1]. It is a simple supply/demand market correction.
Retail traders, and I'm certain other large investment firms with huge amounts of capital, tuned into this and bought shares knowing that the situation would resolve itself. There are a half-dozen other stocks with similar but smaller short percentages.
Robinhood is doing the opposite of their name, they give people an outlet to dump their money and risky features to lose it quickly. They have been fined by the SEC [2] for not disclosing revenue sources and "provided inferior trade prices that in aggregate deprived customers of $34.1 million" they take deposits from the ignorant, let them do risky things which give their money to Wall St.
[0] https://www.investopedia.com/terms/p/pumpanddump.asp
[1] https://www.autoweek.com/news/industry-news/a35340727/heres-...
[2] https://www.sec.gov/news/press-release/2020-321
When a stock is shorted 140% of its outstanding shares it's simply a supply/demand math problem. Eventually those short positions come due via whoever owns them paying too much interest or a margin call and they have to buy actual shares. This demand for shares makes the stock go temporarily up when there aren't enough shares to go around. This happened with VW in 2008 and they temporarily became the most valued company on the planet via a short squeeze [1]. It is a simple supply/demand market correction.
Retail traders, and I'm certain other large investment firms with huge amounts of capital, tuned into this and bought shares knowing that the situation would resolve itself. There are a half-dozen other stocks with similar but smaller short percentages.
Robinhood is doing the opposite of their name, they give people an outlet to dump their money and risky features to lose it quickly. They have been fined by the SEC [2] for not disclosing revenue sources and "provided inferior trade prices that in aggregate deprived customers of $34.1 million" they take deposits from the ignorant, let them do risky things which give their money to Wall St.
[0] https://www.investopedia.com/terms/p/pumpanddump.asp
[1] https://www.autoweek.com/news/industry-news/a35340727/heres-...
[2] https://www.sec.gov/news/press-release/2020-321
Why did you write any of this? Nothing factual, all conjecture. It’s as if you don’t know anything about the situation at all and still chose to write hundreds of words on it in multiple replies. I know my reply isn’t in the HN spirit but I’m not going to debate nonsense either.
The value of something is the price at which someone is willing to buy it at. We all know this. Its a basic fact. You cannot draw a conclusion that something "fishy" was going on because the stock was overvalued. People who ascribe any sort of absolute rationality to the stock market are naive at best, and deceptive at worst.
> If they banned buying and selling GME then they'd have shitloads if pissed customers who lost money
this is nonsense and illegal.
RH went insolvent, paused trading for a couple of volatile stocks in the direction that made them more insolvent and allowed the trades that made them less insolvent, and borrowed at least a billion in cash to stay alive.
this is nonsense and illegal.
RH went insolvent, paused trading for a couple of volatile stocks in the direction that made them more insolvent and allowed the trades that made them less insolvent, and borrowed at least a billion in cash to stay alive.
> This is incompetence
Is it? I thought it was just a liquidity issue at the clearing house level. They had to temporarily ban selling. We get it, it benefitted the "evil" hedge funds to the tune of billions. Wildly coincidental to the point that it's being treated as if it was corruption.
But if it really was a liquidity issue at the clearing house level, what could have been done differently? From how I understand it, they were floating people who where long GME on unsettled transactions credit wise. If the entity you have a credit line with says "you're about to be in danger to the terms you agreed upon unless you fix the problem", they simply fixed the problem (stop allowing more people to rack up GME shares on their credit). Sucks but that's the reality.
Is it? I thought it was just a liquidity issue at the clearing house level. They had to temporarily ban selling. We get it, it benefitted the "evil" hedge funds to the tune of billions. Wildly coincidental to the point that it's being treated as if it was corruption.
But if it really was a liquidity issue at the clearing house level, what could have been done differently? From how I understand it, they were floating people who where long GME on unsettled transactions credit wise. If the entity you have a credit line with says "you're about to be in danger to the terms you agreed upon unless you fix the problem", they simply fixed the problem (stop allowing more people to rack up GME shares on their credit). Sucks but that's the reality.
I didn't know about any liquidity issues. But of that's the case then yeah, this is just regulatory limits kicking in. Though one could make the argument that they should have banned the sale of all stocks, not just GME, AMC, and other stocks targeted by the reddit short squeeze.
I think Robinhood fucked up greatly here in the eyes of their customers, even if they had no real choice in the matter, but they stopped the buying of a dozen or more stocks (e.g. AAL which was not at all targeted by WSB) that had their reserve requirements increased. I believe normally its in the single digit percent, many of them were increased up to 100%.
> I didn't know about any liquidity issues.
Of course not. There were 9,000,000 people in a subreddit convincing each other the stock was headed to the moon getting thousands of upvotes. The real information on what was going on (like the shares short / float metrics being outdated by 15 days) were deeply buried.
Of course not. There were 9,000,000 people in a subreddit convincing each other the stock was headed to the moon getting thousands of upvotes. The real information on what was going on (like the shares short / float metrics being outdated by 15 days) were deeply buried.
>liquidity issues
Yes, there was. Robinhood was not meeting the deposit requirements of their clearing house which is why they required a huge cash infusion from Citadel.
Yes, there was. Robinhood was not meeting the deposit requirements of their clearing house which is why they required a huge cash infusion from Citadel.
They stopped people with cleared credit from buying stock
because they themselves were swamped with 10,000 other users who did not have cleared credit who were buying the stock
Every single Robinhood user could have had $5M in cash in their accounts and they still would have had to suspend purchasing shares. Brokerages cannot use client funds for depository requirements. Every purchase transaction required Robinhood to cover 100% with their own cash until settlement.
How is it market manipulation to make people aware that more than 100% of a stock has been shorted and thus the shorters are going to be in a real pickle? This was all public information.
Either way, the CEO personally deserves jail and financial ruin. Instead he will get money and power.
For what exactly? My understanding is that they ran out of money needed as a back-stop for Dodd-Frank requirements.
Specifically high monetary requirements due to unusually high volatility (essentially a protection created against the risk that the broker will go bankrupt before a trade settles).
Specifically high monetary requirements due to unusually high volatility (essentially a protection created against the risk that the broker will go bankrupt before a trade settles).
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.
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.
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.
>>> 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.
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.
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.
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.
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.
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> 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.
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.
They would have carried on trading $GME if they weren’t called up at 3am by NSCC with a demand for $3 billion security.
I’d be interested in knowing how the NSCC came up with this figure and why they deemed their approach as acceptable.
I believe there is more fault with our regulators that allow the big guys to engage in naked shorts with impunity. There is an incestuous relationship with our regulators and Big Wall Street, so what would one expect.
My respect for Keith Gil just goes up and up. Not only did he play this whole scenario like a champ, he did it ethically and transparently and just seems like an awesome friendly guy to boot.
And he told the comitee he isn't a cat. Epic.
And he told the comitee he isn't a cat. Epic.
CSAPN cut away but you can find it on YouTube:
https://news.ycombinator.com/item?id=26182877
https://news.ycombinator.com/item?id=26182877
The funny thing is, Robinhood is going to come out ahead on this fiasco. There are few good alternatives
I don't know if people have already forgotten, but it used to cost 5$ - 10$ per trade to buy stocks before robinhood came along. For better or worse, they made trading cheaper and much easier for newcomers. Brokerages like TD Ameritrade, E-Trade, Schwab used to charge outrageous fees for trades, but still sold the order flows.
Seems that you get a slightly worse price in exchange for the lack of the $5 trade fee: https://www.google.com/amp/s/www.wsj.com/amp/articles/why-fr...
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Yeah, they got a bunch of free publicity and a huge spike of new users. Even if 95% of them quit in rage, you're still dealing with solid growth numbers.
That's not true at all. There are many better alternatives. I have no idea why people would choose Robinhood besides superficial nonsense like 'it has the best UI'.
Randomly getting my TD Ameritrade account shut down without explanation (they specifically state that they wont give you a reason and tell you to not ask), and all my positions closed (for a loss) a week after moving to them was a pretty good reason to move to Robinhood. I hadn't even applied for margin.
Robinhood seems to people, however ignorant the impression may be, that they don't act like the Big Evil Wall Street Corp guys. So it's not unreasonable to use a good platform for analysis and use Robinhood to trade.
Robinhood seems to people, however ignorant the impression may be, that they don't act like the Big Evil Wall Street Corp guys. So it's not unreasonable to use a good platform for analysis and use Robinhood to trade.
> besides superficial nonsense like 'it has the best UI'.
The idea that UX/UI on a consumer oriented product like this is "superficial" seems bizarre to me.
The idea that UX/UI on a consumer oriented product like this is "superficial" seems bizarre to me.
UI and UX matter and can be killer features.
yeah, I wish there was something with a similarly smooth UI that could do custodial accounts for children
On twitter I noticed that much of the heat against the CEO has died down. I think most people have forgiven him.
I think all that heat was driven by uneducated (market-wise) people furiously commenting to elected officials with a similar lack of market-related education. After some education, the angry masses realized that the CEO had nothing to do with anything that affected them. They just paid some market tuition.
Indeed, it was easy for politicians to try and capitalize on the event (stock market rigged for the rich saga) when in reality it was financial regulation that caused RH to have to stop allowing buy orders in GME.
> it was financial regulation
By “financial regulation” do you mean capital requirements being set by unknown individuals at the DTCC according to a formula that is unknown to the public and, by his own admission, even the CEO of Robinhood himself? I don’t know what I’d call that but it’s not what one typically thinks of as financial regulation.
By “financial regulation” do you mean capital requirements being set by unknown individuals at the DTCC according to a formula that is unknown to the public and, by his own admission, even the CEO of Robinhood himself? I don’t know what I’d call that but it’s not what one typically thinks of as financial regulation.
The agenda and all of the opening statements can be found here:
https://docs.house.gov/Committee/Calendar/ByEvent.aspx?Event...
https://docs.house.gov/Committee/Calendar/ByEvent.aspx?Event...
Will DeekFuckingValue aka Roarring Kitty be on?
His opening statement was released online already, I like how he concludes it with "in short, I like the stock."
https://docs.house.gov/meetings/BA/BA00/20210218/111207/HHRG...
https://docs.house.gov/meetings/BA/BA00/20210218/111207/HHRG...
Annoyingly, they didn't include "I am not a cat" into the transcription - he actually said that live at the beginning of his statement, got a chuckle out of me.
That's a fantastic opening statement.
he had so much $ at one point. I think $60-80 million at the peak. still has a lot but was way more
yes
He seems to have the best composure of all.
He's in a complicated situation where he has to prove himself to not be a foolish internet meme-er worthy of throwing under the bus.
His opening statement _really_ worked to declare that he is a person, a person of value, a person of intelligence and a person that did his actions and purchase of the stock with meaning and genuine belief in the company.
I, an ignorant bystander, was impressed.
His opening statement _really_ worked to declare that he is a person, a person of value, a person of intelligence and a person that did his actions and purchase of the stock with meaning and genuine belief in the company.
I, an ignorant bystander, was impressed.
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Interesting that DFV said he would buy at the current GME price
He likes the stock
Illustrates his ineptitude in analyzing stocks. He literally lucked into $50M. Then he proceeded to squander $35M for internet points.
He's won in multiple trades and put money in gme long before there was any hype based on the lopsided risk and % of shares shorted on the stock. On what basis are you arguing that he lucked into his winnings?
He lucked into a ten-sigma event. That’s luck even if you had the call right. Then he held onto the gains for internet points. That last bit is what gets me the most. This guy doesn’t even compare to some of the epic retail traders we had in the past. Look up cissan_9984.
Do you still think gamestop exploding is a ten sigma event if he called it twice now?
If you've watched any of his YT videos you can understand where he is coming from and he has valid points on why GameStop pivoting could be huge. If a successful pivot doesn't happen, he still believes their legacy business of trading in games is still viable. There are lots of gamers without good enough broadband to download 60GB games and are still on older platforms. The new console rollout was impeded by the pandemic from a supply chain perspective and from people having less disposable income.
Regarding a potential pivot, Ryan Cohen of chewy.com, has influenced the board and already appointed 2-3 senior positions that indicate a digital business formulating. There also were questions why the board/CEO didn't exercise their ability to issue more shares with the price up. One answer/hypothesis was they were not allowed to do so with unreleased significant financial information, like if they took on a new agreement of some kind with another company. Rumors and speculation all over the place but most of it leading to conclusions of GME not going bankrupt soon.
Regarding a potential pivot, Ryan Cohen of chewy.com, has influenced the board and already appointed 2-3 senior positions that indicate a digital business formulating. There also were questions why the board/CEO didn't exercise their ability to issue more shares with the price up. One answer/hypothesis was they were not allowed to do so with unreleased significant financial information, like if they took on a new agreement of some kind with another company. Rumors and speculation all over the place but most of it leading to conclusions of GME not going bankrupt soon.
And the share price immediately jumped 3% :D
why are the people who raised RH capital requirements not testifying?
Increased capital requirements at the DTCC (which I believe you are referring to) were the result of an equation - not due to some discretionary decision.
Yes, why isn’t the DTCC testifying? How does their algorithm set the collateral price? How does a phone call get the collateral price reduced by a billion dollars? Overall it seems that DTCC is a major shadow player that most people never knew about.
Overall I think this entire situation is a combination of sketchy abuse of special power (naked short selling and failure to deliver with little/no consequence) and unforeseen side effects (DTCC able to make entire funds, brokers, and exchanges instantly insolvent over night) leading to the Everyman feeling like they have been cheated by the incumbents. I don’t know the correct path forward but I’ve certainly learned more than I’d expected about order flow.
Overall I think this entire situation is a combination of sketchy abuse of special power (naked short selling and failure to deliver with little/no consequence) and unforeseen side effects (DTCC able to make entire funds, brokers, and exchanges instantly insolvent over night) leading to the Everyman feeling like they have been cheated by the incumbents. I don’t know the correct path forward but I’ve certainly learned more than I’d expected about order flow.
In an interview yesterday on CNBC the chairman (and founder) of Interactive Brokers (very large brokerage firm) made a suggestion: Outstanding short interest should be reported daily (rather than monthly as of right now) and margin requirements should increase by 1 percentage point for every percentage point increase of the outstanding short interest.
would you be able to elaborate?
Here's a good explanation by Matt Levine: https://www.bloomberg.com/opinion/articles/2021-01-29/reddit... under "Why did Robinhood stop them?"
Cool. Thanks
Cato Institute person currently trying to justify not having a tiny financial transaction tax and how awful it would somehow be.
Republican member now laying into how the democrats are being evil because Cato don't like an FTT.
Republican member now laying into how the democrats are being evil because Cato don't like an FTT.
It sounds pretty awful to me also, so I appreciated their analysis. You’re saying I’d have to pay a tax on every trade I (newer retail investor) make? How in possible hell does that help anything?
Citadel did more trades in one day than the entire market did in one year.
Retail investors do a couple of trades a year.
A tax like this would end high frequency trading overnight.
Retail investors do a couple of trades a year.
A tax like this would end high frequency trading overnight.
You buy $50k stock, you'd pay 50c tax, it wouldn't affect you.
You bound 50M in stock between two companies every second in a ladder, you pay $50k/second tax
You bound 50M in stock between two companies every second in a ladder, you pay $50k/second tax
There were thousands of comments from pumpers here on HN too. They were pretty dominant in the relevant threads for a few key days, iirc.