Article name is misleading, this is just another front where monopolistic influence and education meet.
Overall this is not surprising and has been happening for a long while in other areas, ever since near no risk loans for student education financing became the norm, prices have been marked up based on the expected projected revenue from these almost guaranteed loans.
Its been known for awhile that most of these engineering books have only nominal changes in problem sets, and material between editions and this predatory behavior has continued unabated for at least 20 years.
No one in a position to influence the outcome has been willing to make changes for the benefit of the students.
Much of the engineering principles taught in classes at this level have not changed for almost a hundred years so requiring a new edition of a book that is tied to a online subscription (as many are now) is simply predatory and monopolistic.
I've known some professors that have tenure that have bucked the trend and written their own books charging only the cost without copyright, but this is more the exception than the norm and engineering/science has a higher bar when it comes to due diligence with regard to materials.
Honestly, I found this article to be of extremely low quality. It really doesn't matter why this thing happened.
Adding a plausible or even reasonable explanation for why it happened only distracts from the fact that it did happen, and retail traders were disadvantaged as a result.
Distractions are not helpful, and can arguably be considered shill activity in some respects by muddying the waters, it also prevents resolution of the real problems. Please don't add to bullshit, there's enough of it on the street after last week.
Any time there are more sellers than buyers the market price will go down, these are simple mechanics, easily modeled to a fair degree of accuracy, everyone in the market knows this, and this loss that played out was tragic because many people were harmed in the process by the brokerage exchanges/clearinghouses actions.
That fact, is what is important and why the people responsible for these decisions should be held to account.
There need be no conspiracy which many people seem to assume based on their posts, the simple fact is people were disadvantaged because the rules were changed on them inequitably and without notice.
If there was collusion, the SEC should investigate and put people in prison for this, not fine them, as to if that will happen we'll need to wait and see.
The fact remains, retail traders were disadvantaged and as any brokerage firm, if they could no longer trade due to trading requirements all trading should have halted on the platform and a blanket notice sent to everyone as to why; this is obvious, has happened in the past, and obviously this didn't happen this time and hedge funds were allowed to close or possibly re-short their inherently risky positions while retail investors could only look on in shock at being unable to do anything with the rug pulled out from under them simply waiting until the restrictions were lifted or sell at a loss.
This, in my opinion was criminal and a major breach of the public trust, as well as fiduciary responsibility. Even if they have it in the user agreement as a legal caveat with vague language, no one consents to someone saying after the fact, we're going to change the rules when the chips are down and allow your money to be stolen, and actually do it, and you hold us harmless or we won't offer the service; and that is exactly what happened.
A take it or leave it ultimatum to get you in the door which allows shady corporate behavior without court oversight, simply based on the fundamental theory that if you agree to a contract you can't go back and sue them for loss but the contracts can be updated at any time after and by simply clicking/using the service you consent is laughable. Lots of issues around this and arbitration abound, I won't get any further into contract law, I'm not an attorney, its not interesting to me.
What's critical is, a very important line was crossed, and by doing what Robinhood and the other firms did, they have effectively doomed their businesses.
It doesn't matter if google has reset their reviews, or facebook bans groups, it hit the news nationally. Most everyone has heard about what happened and while some may not understand the implications immediately a simple fact remains.
A brokerage business cannot operate without trust, and because some of them allowed a conflict of interest, coupled with their own very possible questionable motives and their actions this is the expected and predictable result.
I personally didn't participate in the new-tulip mania because it doesn't meet my risk profile, but I still pulled all my funds from E*trade the moment I heard trades were limited in one direction.
I cannot trust any brokerage that would allow only buys and not sells for the simple reason that this is a clearly rigged market and you can't make money long-term in a rigged market. A casino is a rigged market.
The only possibility in a rigged market is what the house allows you to make, and companies will always do what's in their own best interest, and when the business becomes taking my money as long as they can provide a plausible reason for it that passes legal muster I have no doubt they can and will do that.
I find the claims of accounts of individuals being liquidated at a loss during trade restrictions because they were margin accounts by default and the margin requirements suddenly changed, troubling to say the least.
Investing is not a casino, and by taking the actions these brokers/clearinghouses did to limit trades in only one direction, they have shown that these firms think it is, by their actions.
I refuse to do business with any business that I cannot trust will follow a very basic duty of care and all of these companies have failed in this respect in my eyes.
They also had a fiduciary responsibility to their shareholders which they broke when they decided to allow trades in only one direction because there will be fallout.
I find it most surprising that there haven't been any shareholder lawsuits filed over this because there are plenty of investors in these financial service companies that will take a loss as a result of these decisions.
Mostly because investors that have been watching this attentively who were not involved in the related securities are now moving their money from firms they can no longer trust due to the now-changed risk profile.
There should be almost no reasonable customer to Brokerage/Exchange counter-party risk with 100% backed funds, and this profile seems to have suddenly changed.
Simple fact, this didn't need to happen, but for a complex number of reasons which are mostly immaterial, it was allowed to happen.
If your the type that wants to go into the why's or hows, focus on the root cause, and you need look no further than its because no one was regulating market shorts, and the shorts thought they could harvest investor money from various securities with impunity through sophisticated structured mechanisms to manipulate the price down with plausibly legal structures.
It doesn't matter that it happened because of lax reporting requirements, no regulation, cheap margin/leverage, or a high barrier to countermeasure. It happened.
Everything that happened and continues to happen after is immaterial except to show us what has changed and what investors will now need to do to adjust for that now changed risk profile.
Edit: on a side note, anyone happen to know why the YC edit/update function isn't working? It claims to update the post but isn't actually working; I had to delete the post and repost to have it actually update for some minor spelling and grammatical corrections and to better clarify specific wording to be less vague.
Overall this is not surprising and has been happening for a long while in other areas, ever since near no risk loans for student education financing became the norm, prices have been marked up based on the expected projected revenue from these almost guaranteed loans.
Its been known for awhile that most of these engineering books have only nominal changes in problem sets, and material between editions and this predatory behavior has continued unabated for at least 20 years.
No one in a position to influence the outcome has been willing to make changes for the benefit of the students.
Much of the engineering principles taught in classes at this level have not changed for almost a hundred years so requiring a new edition of a book that is tied to a online subscription (as many are now) is simply predatory and monopolistic.
I've known some professors that have tenure that have bucked the trend and written their own books charging only the cost without copyright, but this is more the exception than the norm and engineering/science has a higher bar when it comes to due diligence with regard to materials.