Robinhood apparently selling people's shares ”for their own good“

https://twitter.com/ArkhonDH/status/1354834763245359111

by amadeuspagel • 5 years ago

129 32 5 years ago

joncrane2• 5 years ago

what on earth?!?!

I can understand mandatory liquidation due to margin requirements. But AFAIK those don't show up as "orders" on your account that you can see in time to try to cancel.

Reason0773• 5 years ago

I’d guess that this must be a margin account. In that case the broker is perfectly entitled to liquidate positions that they consider too volatile and risky.

If it’s a cash account, then yes, they’d have no right to do this. I’m no lawyer, but I’d assume you’d very likely be able to sue them for any losses.

joncrane2• 5 years ago

But even in a margin account, the broker just "does it" and it shows up as an order after the fact, not one you can see in advance and cancel, AFAIK.

nixor1112• 5 years ago

This was happening with people's "instant deposit" which is actually margins. The problem is that it only initiates and covers an actual cash deposit, making people think it's a cash buy.

The reason it looks like a normal order is because it Robinhood makes it look like one, as it becomes a cash purchase once the funds and purchase settle

aliabd• 5 years ago

I'm genuinely stunned that Robinhood would run over their #1 persona like this. I doubt they will ever recover

swyx• 5 years ago

just a reminder not to believe random images off the internet that can be easily doctored. its possible RH is doing this, but also doesn't make much economic sense if it is just a normal share holding. Hold out for proof. Let's not have HN spread every sensational tweet.

ogre_codes• 5 years ago

Indeed, this sounds suspect.

Confirmation should follow shortly if true.

dfxm12• 5 years ago

just a reminder not to believe random images off the internet that can be easily doctored.

Especially when they're trying to sell you something with the follow up tweet. :)

CivBase• 5 years ago

Use WeBull instead

I was going to say "that didn't age well", but their plug for WeBull came hours after WeBull already announced their own trade restrictions.

https://twitter.com/webullglobal/status/1354828729713881091

nuodag• 5 years ago

Especially when the person posting the pictures at the same time advertises for competing brokerages a bit of skepticism is advised

uniqueid2• 5 years ago

Thank you. This WSB GameStop phenomenon is one of the most poisonous news stories I've seen in the history of the web. It seems to induce irrationality and melodrama as though it were a psychedelic drug.

xiphias22• 5 years ago

Maybe for you it's a news story, but for many of us it's a revolution.

headcanon• 5 years ago

I'm getting first-hand accounts from coworkers about this right now. Seems legit. Appreciate the looking out though, you're absolutely right - we shouldn't jump on every little development while its still rumor.

easton• 5 years ago

But the shares are the user's property. Isn't this theft, since the person got whatever robinhood thought it was worth without consent? (presuming the user wasn't buying on margin which probably includes an agreement that they will liquidate if you won't be able to cover reasonably).

cma• 5 years ago

It may be they bought and sold back and forth rapidly and the unsettled trades are considered on margin even if it was mostly netted out in and out of the same stock. Doing it without settlement itself is similar to naked shorting, because while it should all net out, trades can bust, especially in a short squeeze where people's long positions have been loaned out.

mcherm• 5 years ago

Isn't this theft, [...] presuming the user wasn't buying on margin

Yes. It's also murder for hire, presuming that they contracted with someone to have the user executed.

Honestly, I'm not sure why you would assume that this wasn't a case of buying on margin since the forced liquidation is STANDARD for buying on margin and the user (however reliable they may or may not be as a source) didn't even say that it wasn't bought on margin.

bufferoverflow• 5 years ago

Isn't that illegal?

Reason0773• 5 years ago

Absolutely not if the shares were bought on margin (ie: partly with the broker’s money)

pbiggar• 5 years ago

If you read the subsequent messages, there's a strong suggestion that these are shares bough on margin call.

sschueller• 5 years ago

These are probably margin calls for people trading on margin which is 100% legal and the risk you take when trading on margin.

adrr• 5 years ago

Guarantee it’s this. They changed the capital requirements for certain stocks and people were over leveraged.

mvolfik• 5 years ago

that would explain a lot, this tweet looks a LOT past the line what I would expect them to do.

though there's also this screenshot: https://twitter.com/555Sunny/status/1354854993946406917?s=20

can anyone confirm if this is actually happening or if this is what margin trades at robinhood look like?

onnnon• 5 years ago

Yeah, this guy is clearly a source of reliable news! /sarcasm

https://twitter.com/ArkhonDH/status/1354844807013785606

theinverseidea2• 5 years ago

Robinhood is a private company and can manage their platform as they see fit.

EliRivers• 5 years ago

Well that's just not true at all. Being a private company doesn't magically exempt one from things like laws and regulatory oversight and all the rest of that.

theinverseidea2• 5 years ago

Works for Facebook and others.

nixor1112• 5 years ago

They didn't sell people's shares technically speaking. If you bought shares on margins or options they closed out, and you didn't have excess finances, your positions because they felt you were a risk to yourself. Still really messed up and them doing it when the price was at it's lowest feels illegal, sadly they can bend you over a table all they want because of their t.o.s.

Robinhood apparently selling people's shares ”for their own good“

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